How to Decipher the Changes in Your Credit Score

One of the most important items associated with your name is your credit score. Your credit score essentially explains your financial history. If you have been diligent with your finances and have a healthy credit history, then expect your score to be closer to the 800-point maximum a person can receive. If you are the opposite with high levels of debt or a bankruptcy, your score may be closer to the bottom end score of 350. Your credit score can change for a multitude of reasons. To understand changes, you will need to review your credit report.

Instructions

1

Order your credit report by contacting one of the three major credit bureaus---Experian, TransUnion or Equifax. You can also visit Annual Credit Report's website where you can order a free copy of your report.

2

Review your report. If there are any negative items---or even potentially negative---it will be mentioned. You will also see a listing of active credit accounts, as well as a list of accounts that are in good standing. Your credit score is made up of five components with debt owing and bill payment history accounting for 65 percent. So any negative or positive information in these two categories will sway your score significantly.

3

Examine any negative items. These will be the reason why your credit score has fallen. This can include late payments, delinquent accounts or having a debt level that is too high. Your credit report will list with which agencies there are issues.

4

Have a look at your accounts in good standing. If all of your accounts are in this category, and your credit score has improved, then that means you are financially healthy with little reason to be concerned.

5

Report any errors immediately. The importance of this cannot be stressed enough. Incorrect information can negatively affect your credit score, impacting your ability to, say, get a good mortgage rate when you buy a home. Write to your credit agency and ask them to look into it.