A number called your credit score represents your credit risk level. Typically, the higher the score the less of a risk you are to your lender. Elements of your credit report make up what your specific score is. Your score is not stored along with your credit history, however. It is only generated at a time when the lender requests your credit report.

Your credit score changes along with your credit report based on your credit history. So, payment updates or new credit accounts will cause your score to fluctuate. Different places use different scoring methods, so your score could vary from lender to lender.

Before the dawn of credit scores, a lender had to look at your entire history and painstakingly determine whether or not you were a credit risk. Of course this is both time consuming and error prone. In addition, credit lenders could reject your loan based on factors other than your credit history or your ability to repay debt.

Credit scores make judging the ability to repay debt more fair for everyone. Your credit score is based solely on your past and current credit history. No matter who you are as a person, your score will only reflect your ability to repay debt responsibly.

Most lending institutions that issue credit or loans will use a credit bureau to receive your credit score. This includes banks, credit card companies, auto dealers, and retail stores. These institutions use this method as a means to make determining credit worthiness faster and easier for everyone. While some other factors may contribute to the banks lending decision, like size of income versus size of loan, credit scores are still the leading indicator of one�s ability to repay debt.

This will vary depending upon the score being used. However, here are some things that can impact your score:

• Number and severity of late payments
• Type, number, and age of accounts
• Your total debt to asset ratio
• Recent inquiries to your credit

Keep in mind that credit bureau-based scores can�t use demographics prohibited by the Equal Credit Opportunity Act. This includes things like race, color, religion, national origin, gender, age, marital status, receipt of public assistance, etc. Some lenders may use elements like income, occupation, and type of residence to help determine your credit worthiness.