Credit Score FAQs

1) How do I determine my credit score?
You first have to have some credit history for your lender to be able to determine your credit score. A credit account would suffice in some instances. However, if you still do not have any form of history, you can build your score by applying for a credit or retail card. If you consistently pay your bills and keep debts low, you will be given additional credit points.

2) How is my credit score calculated?
A third party agency, usually a mortgage reporting firm, computes your credit score through a computer thats located where your lender is. The agency will add up the points youve gained based on your credit history and the result of which will help the lender assess your credit or loan application.

3) How do you interpret an Experian credit score?
Credit scores under Experian fall between 340 and 820. The higher the score, the lower the risk.

4) Who decides if my credit application gets approved or not?
Lenders, banks, credit card firms, retail stores and the like are the ones that decide if you qualify for a loan or not. While other factors, such as your gross income, may also affect this decision, a high credit score is the key to boosting your chances.

5) If I have multiple credit applications, will that boost my chances of getting a better credit score?

It depends. Credit scores include every time you apply for credit and give off the impression that youre shopping around for the lowest rates. On the brighter side, most credit scoring agencies now bundle multiple inquiries as just one instance, particularly for auto and housing loans. In this case, asking around about various credit deals will not have any bearing on your application.

6) If I have a high credit score, will that help me get reduced interest rates on my loan applications?

A high credit score means you are in the low-risk range. Therefore, it wouldnt hurt to try and negotiate a more favorable deal with your lender. Keep in mind, though, that not all creditors rely on the Experian model and might have their own scoring models.

7) Do lenders consider scores from all three credit scoring agencies before they decide to approve or reject a loan application?

Some of them do, but not all. There are lenders that rely on the calculations of just one credit scoring agency. To be on the safe side, just make sure you have a sound credit history so that all three agencies rate you positively.

8) I have a joint account with somebody who has had a bad credit history. Will that affect my rating?

Yes. Therefore, before you decide on merging your account with a friend or your husband, you should be aware of his or her credit background and be informed that this will have a bearing on your credit score.

10) Will my credit score be affected by late payments made in the past?

Yes, It will. You will get a higher credit rating if you had paid your bills consistently and on time. Late payments give off the impression that you cannot handle your finances responsibly. Records of late payments remain part of your credit history up to seven years.

11) I have several credit cards. Will that have an impact on my credit score?

Not really. But if your credit cards have high balances, they can reduce your chances of getting your loan application approved.

12) Will the presence of a loan finance account on my history affect my credit score?

Loan financing schemes usually have high interest rates associated with them, which lenders might view as a hindrance to your ability to pay consistently. But, if your records show that you have always paid on time, your credit score could rise and lenders will be more confident and assured of your paying capacity.