Credit scores are based on credit reports, which contain your credit history. The credit score is used by lenders to help predict how risky it would be for a lender to offer you more credit.

The most well-known credit score is called the FICO score, developed by the Fair Isaac Credit Organization. While each credit bureau calculates credit scores using its own unique formula, there’s no mystery to the factors that make up a credit score. MyFico.com, a division of Fair Isaac, offers helpful guidelines to explain what goes into a credit score:

• How promptly you pay = 35% of your credit score
• How much of your credit limits you use = 30% of your credit score
  • So avoid exceeding or maxing out your credit limits
• How long you’ve been using credit = 15% of your credit score
• What types of credit you utilize = 10% of your credit score
  • A secured credit card and high-rate finance company loan don’t do as much for your credit score as an unsecured card and low-rate auto loan
• How much you’ve borrowed recently = 10% of your credit score
• Other factors include:
  • Court judgments
  • Tax liens
  • Number of recent credit checks

Credit reports provide a detailed record of an individual’s borrowing and repaying history. Lending institutions use these credit reports to determine an individual’s interest rate and borrowing capabilities.

What’s in a credit report?

Credit reports are produced by 3 credit bureaus – Experian, Equifax and TransUnion (also known as credit reporting companies) – and include:

• Personally Identifying Information – your social security number, current and previous addresses and employment history
• A summary of the number and types of accounts and whether they are in good standing
• Payment history for each account
• Details of accounts turned over for collection action
• Information about past bankruptcy or judgments
• Inquiries made by lenders or other institutions about your credit report

If you have found errors in your credit report, there are ways to correct them. Your credit report provides information on correcting errors in your file.

Understanding Credit Cards

Why is understanding credit cards important? Credit cards can be easy to get, use and abuse. The more you know about credit cards, the more you can use them to achieve your goals.

Credit cards: What they are and aren’t

• Credits cards are issued by banks, stores and other businesses to allow people to buy things on borrowed money. Credit cards allow you to pay all or only a tiny portion of what you borrowed each month. Naturally, this privilege comes at a cost – typically double-digit interest rates.
• Charge cards, on the other hand, are NOT credit cards. Charge cards must be paid in full each month. Debit cards, which look exactly like credit cards, are just a way of paying from your own checking account without writing a check. You’re not borrowing at all, so it’s not a credit card.

Credit card advantages

These days, many people prefer to pay for their purchases using credit cards. Here are 4 reasons why using credit cards can be a good practice:

• Credit cards help you build a payment history and credit history. If you’re thinking of financing a car or a house, it helps to have an established credit history.
• Credit cards are safer to carry than cash. If you promptly report a lost or stolen credit card, you’re usually protected.
• Credit card companies tend to be good record keepers. Many people use their credit card statements to analyze spending habits or keep track of tax deductible expenses.
• Credit cards are convenient. Most people carry their credit cards 24/7, which are faster and more convenient to use than checks.

Credit card drawbacks

Credit cards are tempting, if not downright addictive to some consumers. Here are 3 things to watch out for as a credit card customer.

• Credit cards are usually the most expensive way to borrow. Try not to carry a balance. Watch your rate every month and pay on time to avoid late charges.
• Credit card rates are subject to dramatic change. Late payments —even on other types of credit – can result in rate increases.
• Credit cards encourage debt. Minimum payments are designed to keep you paying for years, which can easily double the true cost of the item you put on the credit card. Whenever possible, pay off your entire balance every month or as much above the minimum payment as possible.

Credit Learning Center from Countrywide Credit

Looking for credit answers? You’ve come to the right place. Countrywide Credit is dedicated to providing basic information on credit-related topics. This section will help you gain insights to consumer credit, home loans, and real estate lending to educate and empower you.

Types of Credit:

Credit is another word for borrowing power. There are different types of credit such as home loans, educational loan, auto loans and more. This section of Countrywide Credit will provide you with some basic information about:

• Mortgages and Home Loans
• Get the Most out of a Personal Loan
• An Overview of Student Loans
• Types of Business Loans

Understanding Credit Cards:

Credit cards can be easy. Easy to get. Easy to use. Easy to abuse. That’s why credit cards are a good thing to understand. The more you know about credit cards, the more you can use them to achieve your goals. Learn about the ins and outs of credit by understanding credit cards.

Credit Reports:

Credit reports provide a detailed record of an individual’s borrowing and repaying history. Lending institutions use these credit reports to determine an individual’s interest rate and borrowing capabilities. Read more about credit reports.

Credit Scores:

From credit bureaus to credit scores to payment history, credit and credit scores can be a confusing subject. Read on and learn all about the mysteries of credit scores.

Identity Theft:

Identity theft is one of the fastest growing crimes in the nation. Learn about identity theft prevention and steps to take if you have been a victim of identity theft.

Credit & Divorce

Deciding to part ways can be overwhelming – not just emotionally but also financially. Learn about credit and divorce.

Credit & Bankruptcy

Bankruptcy is usually “the option of last resort” for people in a financial crisis. Bankruptcy alternatives include credit counseling and debt consolidation. Learn about credit and bankruptcy.