This is the second of two columns on credit reports and credit scores.
The Federal Reserve Board’s "Credit Reports and Credit Scores" is the source of information for the columns (available at www.federalreserve.gov/creditreports/).
The first column provided information on the nationwide credit bureaus, what basic information the bureaus collect and to whom the bureaus commonly disseminate information collected. Readers also were offered information on how to request free annual credit reports.
This column focuses on credit scores.
Credit scores are represented by numbers, which as the Federal Reserve Board notes, are designed to help lenders predict how likely it is that you will repay a loan and make payments when they are due.
Some data commonly used to calculate scores include timely payment of bills; type and number of accounts, including credit card accounts; how much of your available credit you are currently using; collection actions against you; the age of your accounts; and outstanding debt.
Credit scores, of course, can change as your financial information changes.
For tips on improving credit scores, see the Federal Reserve Board’s “5 Tips: Improving Your Credit Score” (available at www.federalreserve.gov/consumerinfo/fivetips_creditscore.htm).
In certain instances when applying for credit, a lender may provide you free of charge with the credit score used. Consumers also may buy their scores from the nationwide credit bureaus, Equifax, Experian, and TransUnion.