Credit Card Report
Financial News Made Easy

Credit scoring applies a mathematical formula to the information in a consumer’s credit-bureau file to predict how likely the consumer is to fall behind on debt payments. The higher the credit score, the lower the presumed likelihood of default. Find out how your credit score is calculated.

One thing that definitely befuddles many consumers is the credit-scoring system. And things got a little more confusing when the three major credit bureaus — Equifax, TransUnion, and Experian — recently said they had joined to create their own branded credit-scoring model, which they hope will replace FICO, the one now widely used by lenders.

It is true that when you agree to pay less than the full balance on an old debt, it can affect your credit score negatively.

What’s your credit score? You probably don’t know. And this is a case where what you don’t know could hurt you. Credit scores give banks, mortgage bankers, credit card companies and other lenders an instant snapshot of your trustworthiness when it comes to repaying debt.