How to Interpret Credit Score

Credit scores are often used by loan companies, banks, and other credit card companies to determine if you qualify for a loan, credit card or mortgage. They can also be used as a guideline for yourself to determine how carefully you should spend in the future. To understand credit scores, you'll need to understand what most commonly determines a credit score, and what a good one is.

Instructions

1

Understand where the credit score comes from. Generally, credit scores are calculated by looking at your payment history, current debt, credit history, how much new credit you've applied for recently, and some other minor factors such as the variety of debt you have.

2

Determine whether or not your credit score is good. The most common credit score scale is the FICO scale. This scale ranges from 300 to 850. A good credit score is close to or more than 650.

3

Determine what this score means. A credit report will generally break down the individual categories behind a credit score. If you have a bad credit score, this means you have a number of negative factors affecting your credit score. Negative factors include: A lot of outstanding debt, a lot of recent credit checks, and a lot of late payments.