Credit Rating

What Is a Credit Rating?
When you use credit, you are borrowing money that you promise to pay back within a specified period of time. A credit score is a statistical method to determine the likelihood of an individual paying back the money he or she has borrowed.
The credit bureaus that issue these scores have different evaluation systems, each based on different factors. Some may take into consideration only the information contained in your credit report, which we look at below. The primary factors used to calculate an individual's credit score are their credit payment history, current debts, time length of credit history, credit type mix, and frequency of applications for new credit. Because the scoring systems are based on different criteria which are weighted differently, the three major credit bureaus in the U.S. (Equifax, Trans Union, and Experian) may issue differing scores for an individual, even though the scores are based on the same credit report information.

You may hear the term FICO score in reference to your credit score - the terms are essentially synonymous. FICO is an acronym for the Fair Isaacs Corporation, the creator of the software used to calculate credit scores.

See also: Consumer Credit Bureau , Credit Rating , Credit Report , Fico Credit Score , Fair Credit Report , Home Equity Loans , Free Credit Report