A point system is used for credit score calculations. How high or how low this score gives a better idea of financial standing.

Ricky is a consumer with a keen interest in knowing how these measures are worked out.

Calculated by credit bureaus, they summarise information contained in credit reports. There are various factors affecting how calculations are made.

These include considering how Ricky has paid his bills, the debt he owes and his employment.

Credit reports include a lot of data about the way that an individual or borrower has conducted their credit behaviour. They are quite extensive, because they have information such as how much you’ve borrowed as well as how diligently the debts have been paid back..

They are also affected by skipped payments, having excess debt, the length of time for which you’ve been in debt and present debt obligations. With too much debt to his name, Ricky lowers his scores. Credit providers are less likely to provide him with finance because they consider him unable to afford to repay the loan.

Pay more than the minimum owing to better your credit score significantly.

750 +                     Excellent – Ideal debtors fall into this category of debtors.

720 – 749             Very good –These are regarded as responsible debtors.

680- 719               Good – Applicants in this category aren’t guaranteed approval.

619 – Below       Very Poor – There is no qualifying for credit with credit score in this category.

This number provides a useful overview of the risk level a credit applicant presents. A favourable outlook presented in numbers means that you are a reliable debtor and you are more likely to pay creditor on time. You are charged low interest rates when you are a low risk debtor.