What is a Credit Score?

A credit score is a number generated by a mathematical equation taking into account all aspects of your credit report. The equation takes into account your credit history (have you paid your bills on time or not and statistical information about how you pay your bills - 35%), the amount you owe ( balances of all money lent to you, whether secured or unsecured, and are you are close to maximum credit availability or not - 30%), length of credit history ( how long have you had credit 15%), new credit ( how many of your accounts are new, are you applying for new ones - 10%) and types of credit used ( secured or unsecured, fixed or revolving - 10%). It's important to note that your score helps lenders identify the risk in lending you money. The higher your score, the less risk you are which translates into lower or higher interest rates, or larger amounts of money or higher credit lines offered to you. Based on how you rate in the percentages above, you will be given a score anywhere from 300 to 850.

Your score will most likely be different at all three agencies. It is important to realize this and when applying for new credit, your lender will typically pull all three scores if they don't use just one to determine your risk. It is also important to know that your score is not a static number. Considering that your lenders typically report every 30 days, your score will change just as much and is only generated when a score is pulled. In other words, your score could be different tomorrow from today.