Credit Score

Credit Scores are used by lenders to assess the creditworthiness of an individual. The stronger the credit score the greater the opportunity to negotiate more favorable terms and interest rates. Weaker credit scores deter banks from lending, and encourage more stringent terms and interest rates, to protect their own position.

High Credit Scores


A high credit score based on favorable credit information indicates you are in a strong position to payoff debt, which assists you in negotiating better lending terms with banks and institutions.



Low Credit Scores


A low credit score based on unfavorable credit information can make negotiation with lenders more difficult, but does provide a gauge of your status, and insight into how much you need to improve your score to get better terms.



Credit Score Bands


Credit Scores range from 300-850. Scores below 600 are typically regarded as high risk borrowers, 620 indicates away from high risk, 640 is approaching average, and 650 is about average. Scores near to 700 and beyond are generally considered excellent. Scores fluctuate depending on payment history, the amount owed and available credit, length of credit history, new credit, and types of credit in use.



What Reduces the Credit Score?


Various factors reduce the credit score including:


1. late payments

2. collection accounts

3. settled accounts

4. repossession

5. foreclosure

6. public record items


Closing credit card accounts with a resultant increase in existing credit card balances can also adversely affect the score. The credit information shown in the report shows how it can affect and undermines your score, and highlights the ways in which you can move forward to generate an improved score.



Improving the Credit Score


Improving one's credit score is possible by reducing the amount of credit, decreasing the number of credit cards, having a more balanced source of credit, paying bills on time, and paying any outstanding bills. All these and a host of other methods are important in becoming a more lucrative prospect to lenders.

Credit Scores influence the credit terms offered for credit cards, mortgages, auto loans and other forms of finance.