Experian Credit Score Explanation

Experian, along with Equifax and Transunion, maintains and reports consumer credit reports and credit scores. Credit scores may also be referred to as FICO scores. Credit scores affect your ability to get a home loan, car loan and consumer credit cards. Utility companies and cell phone companies also sometimes review credit scores prior to providing service.

Significance

Creditors and loan companies use your credit score to determine if they will grant you credit or a loan. Experian assigns a letter grade to go along with credit scores. Scores above 901 receive an A, scores from 801 to 900 receive a B, scores from 701 to 800 receive a C, scores from 601 to 700 receive a D and scores 600 and below receive an F. Typically, consumer need to have scores in the C range or higher to get home loans.

Features

The Experian credit score considers several factors when formulating the credit score. These factors include the total amount of debt owed, the type of accounts, the age of account, the number of late payments and the number of public records related to credit such as lawsuits for money owed to creditors and collection agencies. According to Experian, late payments tend to have the biggest impact on your credit score.

Misconceptions

Credit scores do not consider personal financial factors such as yearly income, job history and job title. However, creditors and loan companies may take these factors into consider when determining credit worthiness. Also, many consumers may think that closing paid-off accounts would be a wise decision, but it's not. Leaving these accounts open with a zero balance improves the credit utilization ratio, which raises your credit score.

Improvement

According to Experian, credit scores take into consideration the most recent information on your credit report. Thus, making changes now can positively improve your credit scores. Experian recommends that consumers pay their bill in a timely manner and keep credit card balances as low as possible.

Identification

To identify problems on your credit report, check your report often. Experian offers one annual free credit report per year; however, they require a fee for you to obtain your credit score.