Credit Scoring: The Upside for Consumers

Understanding what credit scoring is and what your individual score means provides insight on your level of credit risk. But credit scoring is also a two-way street; scoring can help companies better understand and serve you. In today's harried business environment, credit scoring is a unique tool allowing a creditor, for example, the ability to quickly and accurately evaluate their potential customers.

So what's the big deal? Well, credit scoring offers the following benefits:

• Fast Credit Approval
  Coupled with fast computer systems, each application for new credit can be scored and evaluated in seconds. For example, credit scoring has allowed companies to offer "instant credit," which was unheard of in years past

• Accuracy
  Factors involved in any credit score are considered using a uniform process, eliminating human error and bias. Your race, age and gender don't impact your credit score, just your credit history.

• Reduced Bad Debt Losses
  Credit scoring allows companies to more accurately predict which new customers will end up being high-risk, lowering the overall cost of doing business.

• Reduced Operating Costs
  Faster, cheaper and better credit scoring means lower costs for businesses and better rates for you, the consumer.

Scores reflect credit payment patterns over time with more emphasis on recent information. Your personalized PLUS Score comes with an analysis that shows you the factors that are impacting your rating.

Here is a list of factors which, in general, may positively impact a score, or help you to maintain your current score:

• Pay Your Bills on Time
  Payment history is one of the single most important factors in determining a score. Delinquent payments and collections can have a major negative impact on a score.

• Pay Down Your Debts
  Pay off debt rather than moving it around. Owing the same amount, but having fewer open accounts may negatively impact a score.

• Low Balances
  Keep balances low on credit cards and other "revolving credit." High outstanding debt can affect a score.

• Apply for New Credit Sparingly
  Apply for and open new credit accounts only as needed; don't open accounts just to have a better credit mix.