Credit is your attitude to pay, there are many factors which predict your credit score such as Balance on the trade line to the maximum limit, late payments, judgments, collections and off course inquiries by the creditors.
Your credit score is a judgment about your financial health, at a specific point in time. It indicates the risk you represent for lenders, compared with other consumers.
There are many different ways to work out credit scores. The credit-reporting agencies Equifax and TransUnion use a scale from 300 to 900. High scores on this scale are good.
The higher is your score, the lower the risk for the lender.
Lenders may also have their own ways of arriving at credit scores. In addition, lenders must decide on the lowest score you can have and still borrow money from them. They can also use your score to set the interest rate you will pay.
Credit-reporting agencies and lenders use a mathematical formula to figure out your credit score. This formula takes into account Various factors described in your credit report, such as:
1. Your payment history (Do you carry over a balance on your credit card from month to month? Have you ever missed a payment on any of your debts?);
2. Any collection or bankruptcy recorded against you (Has a collection agency had to collect an unpaid bill from you? Have you ever been bankrupt?);
3. Your outstanding debts (What is the limit on your credit card? Is your spending close to your credit limit?);
4. Your account history (How long have you had credit?);
5. The number of recent inquiries made about your credit report (How many times has someone asked about your credit
6. The type of credit you are using (Do you only have credit cards, or do you have a mix of credit cards and loans?).