The Basics of Credit Scores and Credit Reports

By Stock Research Pro • February 5th, 2009

A credit score is a value computed by a credit reporting agency or credit bureau to represent a person’s credit-worthiness. A credit score is based on credit report information presented in the person’s credit history. This information is sold on a subscription-basis to banks and other companies for making their credit decisions. Some of the common factors that are used in calculating a person’s credit score include the length of the person’s credit history, timeliness of payments, and a measure of their outstanding debt (current debt v. available debt).

What is a Credit Report?

A credit report, or consumer credit report, is a record of a person’s credit activities, including credit account information, outstanding balances and loans, and the person’s bill payment history. Lenders have a legal right to review credit reports in making their decisions to grant credit. Most of the information on your credit report comes from the businesses with which you have accounts or loans.

What is a Credit Bureau?

A credit bureau, or consumer credit bureau, is a private, for-profit agency that compiles consumer credit information for distribution to creditors. The three major credit bureaus are Equifax, TransUnion, and Experian. In reviewing their own credit reports, consumers will often order reports from all three bureaus for comparison.

What is a Good Credit Score?

A score of 650 or above is generally considered to be a sign of good credit. A score at this level will usually give that person a good chance of obtaining loans at a good rate of interest.

While a score in the range of 620 to 650 can indicate good credit, it can also indicate potential issues that creditors may need to review in further detail before approving a loan.

A credit score below 620 can make it difficult for that person to obtain a loan. At the very least, the process will be lengthier and require a more detailed analysis by the creditor. A score below 620 can mean the person represents a significant credit risk.


The above information is educational and should not be interpreted as financial advice. For advice that is specific to your circumstances, you should consult a financial or tax advisor.


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