by Sapphire Magpie Ravenclaw

Created on: May 17, 2008   Last Updated: June 09, 2008

Repairing credit may seem difficult at first but following a few simple steps can help.

Know your credit score: How do you find out what your credit score is?

The 3 main companies holding credit reports are Equifax, Experian and Trans Union. There are other smaller companies which also hold the information but these three companies are the most likely to hold substantial, comprehensive information. Smaller companies often only have limited information.

What is a credit score?

This is the most significant way in which lenders assess your financial status and lending risk. A low score is likely to mean that it is difficult to obtain credit. A credit score is assessed by taking a number of factors into account. Lenders will do this in order to determine your ability to make repayments and to assess any risk of you not being able to pay. In determining your credit score, the following factors are likely to be taken into account:

1. Working status (employed, self employed, etc. and your annual income)

2. Existing credit commitments (a lack of credit history can be disadvantageous as there is nothing to show your ability to make repayments; having several financial commitments or difficulties in paying existing creditors may make obtaining credit difficult)

3. How long you have lived at the same address

4. Other information pertaining to credit such as defaults and bankruptcy

5. Links to other people (eg. if you have applied for joint credit with another person, your report will be connected to theirs)

Different companies may use other information to determine your credit score, which is, in simple terms, a three digit number; the higher the number, the more likely you are to be granted credit and to get the best deals for interest rates.
This number is a more efficient way of checking whether a company considers an applicant low risk or high risk, as opposed to checking manually through a full report. Systems for the big three credit scoring companies are based on "FICO" which is the original credit scoring system named for the company which originated it, Fair Isaac and Company.

The range for a credit score is between 350 and 800 according to the FICO system, although some companies may use any range of numbers between 0 and 1000. Whichever system is used, the higher the score, the more likely you are to obtain credit and/or get lower rates of interest on financial products.

According to FICO, the average credit score is 723 which meaning the "average" citizen should be able

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