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Getting to Know Your Credit Score

October 19, 2015

Banks, credit card companies, and other businesses use credit scores to estimate how likely you are to pay back money you borrow. A higher score makes it easier to qualify for a loan or lower interest rates. Many scores range from 300-850 but each company may use different ranges.

Did you know you can have many credit scores?

You can have more than one score, because:

  • Lenders use separate scores for separate products
  • There are many unique credit scoring formulas
  • Information can come from different credit reporting sources

For instance, your credit card score could be different from your home loan score and the scores you purchase online could be different from both of those. For some people, these differences aren’t that big. However, since lenders use various scores, you might qualify for lower rates with one lender and not another. Shopping around can reward you.

Where do credit scores come from?

Your credit scores are generally based on information in your credit reports. This information is reported by your creditors to credit reporting companies. The three biggest are Equifax, Experian, and TransUnion.

Several variables affect your credit score:

  • How many credit accounts you have
  • How long you’ve had those accounts
  • How close you are to your credit limit
  • How much credit you have left
  • How often your payments have been late
  • Other factors

How can I raise my score?

  • Pay your bills on time, every time
    • Set up automatic payments, or set up electronic reminders—this will take the guesswork out of remembering deadlines.
  • Don’t get close to your credit limit
    • Credit scoring models look at how close you are to being ‘maxed out,’ so try to keep your balances low in proportion to your overall credit limit. Experts advise keeping your use of credit at no more than 30 percent of your total credit limit.
  • A long credit history will help your score.
    • Start to develop your credit score early on as these scores are based on experience over time. Your score will improve the longer you have credit, open various types of accounts, and settle up what you owe on time.
  • Be careful when closing accounts.
    • If you close some credit card accounts and put most or all of your credit card balances onto one card, be cautious. It may hurt your credit score if you are using a high percentage of your total credit limit. Frequently opening accounts and transferring balances can hurt your score too.
  • Only apply for the credit you need.
    • Credit scores look at your recent credit activity as an indicator of your need for credit. If you apply for a lot of credit over a short period of time, it may appear that your economic circumstances have changed for the worse and you will be doing yourself a disservice.

Credit reports and credit scores are equally important

Mistakes in your credit reports could hurt your credit history and credit score, so check them regularly. You can get one free credit report from each of the big three credit reporting companies every 12 months. Go to  or call 877-322-8228.

What do I look for when I receive my report?

Look for:

  • Mistakes in your name, phone number, or address
  • Loans, credit cards, or other accounts that are not yours
  • Reports saying you paid late when you paid on time
  • Accounts you closed that are listed as open
  • The same item showing up more than once (like an unpaid debt)

How do I fix a mistake in my credit report?

If you find something wrong in your credit report, contact both the credit reporting company and the creditor that provided the information. Explain what you think is wrong and why. Be sure to include copies of documents that support your dispute.

Have concerns about managing your credit? If you have any questions about the above material or wish to speak to an attorney, please contact HoganWillig at 716-636-7600. HoganWillig is located at 2410 North Forest Road in Amherst, New York 14068, with additional offices conveniently located in Buffalo, Lancaster, and Lockport.