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Do you know your credit score?

Your Credit Bureau score is just a number. It is not an endorsement of you; it doesn’t instruct credit and service providers to give you credit. So you really don’t need to know what it is or even to worry about it.

Right? Wrong. Your Credit Bureau score is designed to show you, by way of a number, the strengths and weaknesses of the information in your credit report. It shows you how your credit standing compares with other consumers.

The information in your credit report is used by most credit and service providers as an important contribution to the development of their own credit risk score. This, along with your employment history; your income and affordability assessments as well as the type of credit for which you are applying, may affect the outcome of your credit application.

Your Credit Bureau score is calculated using a formula that evaluates how well or badly you pay your bills, how much debt you carry and how all of that stacks up against other borrowers. In effect, it tells you in a single number what your credit report says about your management of existing credit.

Generally, the higher your score, the better. A TransUnion Consumer Credit Score, for example, can range from 0 to 999 or from poor to excellent. The following score bands are defined for the score:           

• EXCELLENT: 767 – 999
GOOD: 681 – 766
•  FAVOURABLE: 614 – 680
  AVERAGE: 583 - 613
  BELOW AVERAGE: 527 – 582
  UNFAVOURABLE: 487 – 526
  POOR: 0 - 486

All the credit information in your credit report contributes towards the calculation of your credit score.

So if you want to apply for credit to buy a home or car, for example, or to apply for an increase in your credit limit, your credit score can serve as a guide. A poor, unfavourable or below average score indicates that you have some work to do to improve your credit risk rating.

It could also indicate that there could be a problem with the information contained in your credit report. It could alert you to the fact that you need to investigate and possibly challenge some of the information contained in your credit report – before you apply for that all important loan.