Understanding your credit score

A credit score is a number generated by a mathematical formula, or algorithm, based on information in each individual's credit report. Lenders use different scoring models to determine if an applicant is worthy of credit, and these different models are why men and women have three different credit scores.

But each of these models relies heavily on an individual's credit report.

Two of the most influential factors in determining an individual's credit score are payment history and the amount of money owed. Payment history includes history of payment on credit cards, retail accounts, installment loans, and mortgages, among other things. Adverse public records, including bankruptcies, liens and wage attachments also factor in. A credit score also takes into consideration the amount owed, including amount owed on certain types of accounts and the number of accounts with balances. In addition to payment history and amounts owed, the algorithm used to determine a credit score also considers an individual's length of credit history, any new credit accounts they have opened and the types of credit they have used. The higher a person's credit score, the better interest rate that person is likely to receive from a lender.

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