What Does a Credit Score Represent?

A credit score is a number assigned to your credit report to reflect your likelihood to default on a loan or credit account or pay-off the same. A credit score takes all of the data from your credit report, such as account information, inquiries and public records, and assesses it to arrive at your number.

Account Information

Your credit score takes into consideration a variety of information related to your accounts. According to the Consumer Federation of America, your payment history on credit accounts constitutes up to 35 percent of your score. Consistent, on-time payments increase this number. Thirty percent of your credit score comes from your debt to credit ratio. The higher the percentage of credit used to available credit, the lower your credit score.

Credit Inquires

The number of new credit accounts opened and applied for during the period immediately before the credit score inquiry determines approximately 10 percent of your credit score. Applying for too many accounts at once can lower a credit score. Accessing your own credit report and credit score, however, does not impact your credit score as an inquiry, despite appearing in a full credit report.

Public Records

Public records affect your credit report and credit score. These include any tax liens imposed for delinquent taxes on your personal property or real estate. Bankruptcy records are also visible on your credit report. Accounts included in a bankruptcy filing stay on your report for seven years while the bankruptcy itself appears for seven years, if you filed a Chapter 13. Chapter 7, 11 and 12 filings remain for 10 years.

Your Credit Score to a Lender

Your cumulative credit score represents the individual components in your credit report to a potential lender. According to Experian, a credit score of 700 or above demonstrates good credit management skills. A score below 700 does not mean you cannot receive credit or secure a loan, but it does affect the terms of any such arrangements. Lower credit scores may not receive competitive interest rates or the higher credit limits awarded to applicants who apply with more solid credit histories.