KANSAS CITY, Mo. -- Your credit score is the number that lenders typically use to estimate the risk they would take on in giving you a loan. Kathy Stepp visited FOX 4 to share how your credit score is figured and how it affects you. The number was originally derived by a formula created by Fair Isaac & Company, so the credit score is sometimes referred to as the FICO score. (The three credit reporting agencies now use slightly different formulas, so the scores vary a little.) The formula includes payment histories, amounts owed, length of credit history, amount of ‘new’ credit, and types of credit used.
Tips to increase your credit score:
- Pay your bills in full and on time
- Keep your debt to a minimum
- Close unused accounts
- Contact creditors before they contact you
- Use a mixture of credit cards and installment loans