How scores are calculated

Lenders create models by reviewing a set of consumers, examining their credit profiles and identifying common variables.  Using this information, they build statistical models that assign weights to each variable.  Lenders then combine these weights to create a credit score.

Thousands of credit-scoring models are in use in the credit industry.  Different models will consider different variables for different types of credit.  For example, an auto loan would more closely consider payment statistics related to auto loans.

Generally, positive credit characteristics will make your score higher and help you to qualify for loans and better interest rates.  Negative characteristics will make your score lower and interfere with your ability to get the best loans/rates.

Your credit score is one of the most important factors used by lenders to determine whether to grant you credit, how much credit to grant you, and at what interest rate to grant it.  For this reason, it is important to know that your score truly represents your credit standing.  Generally, the higher your score, the better off you are.

Since your credit score is a reflection of your past credit history, there is no magical way to improve it immediately; however there ARE steps you can take to raise your score.

Canadian Residents may obtain credit scores through the major credit bureaus:

Identity theft occurs when someone obtains pieces of your personal information, such as your driver’s license number and social security number, and uses them to impersonate you.  They may create credit accounts in your name, obtain employment in your name, or even apply for a mortgage in your name!

In 2003, the Federal Trade Commission conducted a survey on Identity Theft.  Their survey suggested that nearly 10 million Americans were affected by identity theft during the previous year!  That’s a LOT of people!  (Understatement?  Possibly.)