The Ultimate Credit Score Quiz

Your three-digit credit score is not representative of one thing, but rather is calculated from a number of different factors that could affect your credit worthiness.

Without an explanation of what it means and what creditors want, the score is just an incomprehensible number.

Consumer rights organizations and even the U.S. Congress pressured the credit reporting agencies to disclose this previously secret information.

Fair Isaac Corporation was the company that developed the credit score used by the major credit bureaus.

The three major credit bureaus in the U.S. are named Experian, Equifax and TransUnion.

The score is drawn from various facts that are written on your credit report, weighted via a proprietary formula.

Since credit scores are most used to determine the likelihood that you will repay a debt, it is logical that payment history would be the most important element of the score.

The smaller percentage of your available credit that remains unpaid at any given time, the worse your credit score will be.

Lenders are not looking to weed out as many potential customers as possible. They simply want to have an accurate picture of your reliability as a borrower.

Hard inquiries are those by lenders investigating your credit, and negatively affect your score for a short time. Soft inquiries do not affect your credit rating.

You will be considered a less risky borrower if you have positive experience with different types of loans, rather than just one.

Each of the three major bureaus has their own system that is based on the original FICO score. BEACON, for example, is used by Equifax.

If your credit score is higher, you are considered a less risky borrower and are rewarded with a lower interest rate.

A longer repayment schedule usually translates into a somewhat higher interest rate.

While a credit score has no direct connection with insurance claims, insurance companies have noticed the two are correlated.

Due to this controversial practice, a credit card that is paid consistently on time might still see a dramatic rise in interest rate due to a default on a completely different loan.

By maintaining an old account, even if you never use it, you are improving your debt-to-credit limit ratio, one of the factors that determine credit score.

Since payment history is the largest factor in determining your credit score, improving this aspect of your credit history will have the greatest impact.

If all the credit inquiries occur within a short span of time, they will be considered as a single inquiry for credit score purposes.

This practice was previously a way that someone with bad credit could slowly improve their score. It is no longer effective, however, with companies that follow the FICO '08 formula.