What does your credit score say?

PARKERSBURG — A credit score can tell a potential lender if a borrower is a good risk for a loan.

A score is calculated based on credit history and how well they are handling their credit, said Pam Dowler, executive director of Consumer Credit Counseling of the Mid-Ohio Valley.

‘‘The higher the score, the better interest rates and premiums on insurance rates people can get,’’ Dowler said.

A credit score is a three-digit number based on a borrower’s bill-paying history, debt profile and statistical information about other borrowers that lenders use to determine the likelihood of certain credit behaviors, including whether someone will pay on time, according to ConsumersUnion.org, a non-profit publisher of consumer reports.

Dowler said a credit score runs between 300 and 850.

A credit report, which includes the score, has a person’s name, address, social security number and possibly their workplace as well as any public record the person might have had generated, including whether they have ever declared bankruptcy, being sued or so on, she said.

Criminal records are not included on a credit report and bad checks are not included unless they had been turned over to a collection agency.

A credit report can detail any credit a person has had over the last 10 years. Dowler said if someone has spent the last 10 years paying off credit card debt and finished paying it off today, that information would be available for the next 10 years. A credit score is calculated by using mathematical models that analyze credit worthiness, according to ConsumersUniom.org.

‘‘The models consider the amount and types of debt one owes and then analyze and compare someone’s repayment history with thousands of other consumers to arrive at a credit score,’’ they said.

People with high credit scores have traditionally have an excellent payment record, no court judgments against them, not many inquiries on them and the length of time they have held many of their accounts, Dowler said.

A low score can include someone who has trouble making their payments, have had collection agencies try to collect back and late payments, have had court judgments against them where they had to pay a specified amount to someone and have had a large number of inquiries from lenders checking their credit score, she said adding someone doing a check of their own credit report is not counted as an inquiry.

Dowler said a credit report can also show how much credit someone has available. Even if someone has little or no debt, but has three credit cards with a $5,000 limit for each, someone could determine that person has a potential for $15,000 of debt and that can affect their credit score.

‘‘We advise people to only have one credit card,’’ she said. ‘‘The more debt someone has, credit card companies can up their interest rate and lower their credit amount.’’

Dowler said the highest credit score she has seen for someone is 813.

They advise people check their credit score annually due to the potential of identity theft and to make sure mistakes have not been made.

‘‘People need to know where they stand,’’ Dowler said.

Credit reports are available through a number of different sources at a variety of fees and costs.

Reports can be gotten through the Consumer Credit Counseling Office for a fee and Dowler said they have counselors who can go over it people.

The three major consumer credit reporting agencies are Equifax, Experian and TransUnion. People can also go through AnnualCreditReport.com which allows someone to request a free credit report once every 12 months from each of the three nationwide consumer credit reporting companies.

Lenders can pull a credit report after customers sign the proper releases as well as credit card companies. A potential employer or an insurance company can pull a credit report.

‘‘It can be used for a variety of different things,’’ Dowler said.

Increasingly, credit scores are being used for purposes other than determining whether someone will default on a loan or make late payments, according to ConsumersUnion.org.

‘‘For example, some insurers are using low credit scores as indicators to identify individuals they believe are more likely to make claims against their insurance policies,’’ they said. ‘‘These insurance companies maintain that there is a correlation between poor credit and filing multiple insurance claims.
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