5.2 Credit Scores and Credit Reports

Notes

A credit report lists your credit accounts and payment history. A credit score is a number summarizing how risky you look to lenders; higher is better.

• Main factors: payment history (the largest), amounts owed, length of credit history, new credit, and mix of credit types.
• Credit utilization = balance $\div$ credit limit. Lower is better; many experts suggest staying well below 30%.
• Example: balance $300, limit $1,000: $\displaystyle \frac{300}{1000} = 30\%$.
• Check your reports regularly for errors, and dispute mistakes with the credit bureau.
• A good score can mean lower interest rates, easier renting and lower deposits.