What is your credit score based on

A credit Score is a number used by lenders as an indicator of how likely an individual is to repay his debts and the probability of going into default. It is an independent assessment of the individual's risk as a credit applicant.

CBS's Credit Score:

• A CBS Credit Score is a four-digit number based on your past payment history on your loan accounts.
• The score range from 1000 to 2000, where individuals scoring 1000 have the highest likelihood of defaulting on a payment, whereas those scoring 2000 have the lowest chance of reaching a delinquency status. Together with the score, the risk grade and risk grade description are provided.
• Your credit score is just one factor used in the application process. Other factors apart from your credit report, such as your annual salary, length of employment, bankruptcy/litigation information, number of credit facilities may also be taken into consideration by lenders during a loan application.
• CBS neither "blacklist" nor play a part in the lending approval decision which is fully undertaken by lenders and its lending policies. CBS instead, only provides specific factual credit-related information about consumers who have credit or loan facilities to the lenders.

Description of Credit Score

Factors that Affect Your Credit Score?

1. Utilization Pattern

• This refers to the amount of credit amount owed/used on accounts by individuals.

2. Recent Credit

• Lenders may perceive that you are over-extending yourself if you have newly booked credit facilities within a short period of time.
• Consumers are advised to apply for new credit in moderation.

3. Account Delinquency Data

• Presence of delinquency (late payment) on your loan accounts will reduce your credit score.

4. Credit Account History

• A consumer with long established credit history is deemed to be more favorable or a reliable borrower when compared to one who has limited or no credit history.
• Accounts with history of prompt payments will help to boost your credit rating.
• 12 months of account repayment conduct (closed and defaulted accounts are also included) as displayed under the Account Status History in your credit report is used for score calculation.

5. Available Credit

• This refers to the number of accounts available (open or active) for credit.

6. Enquiry Activity

• This refers to the number of new application enquiries found in your credit
• Each time a potential bank/financial institution pulls your credit report in response to a new loan application, an enquiry is placed on your file. Having too many enquiries in your credit report indicate to lenders that you are trying to take on more debt, therefore increasing your credit exposure.
• To keep your enquiries to a minimum, try to limit the number of loan facilities and credit cards which you apply for.
• Review enquiries on existing loan facilities do not affect your score.

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A few decades ago, when the three major credit reporting agencies first adopted the FICO Score, credit scoring was a new and mysterious concept to consumers. Many people didn’t understand how credit scoring worked, and they had no idea where their own credit scores stood.

As time passed, more people began to pay attention to these important numbers and how they’re calculated. Consumers learned that their credit scores could have a significant impact on their ability to qualify for financing, and how much they would pay to borrow money. But still, not everyone fully understands what factors go into determining their credit score.

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Payment history, the number and type of credit accounts, your used vs. available credit and the length of your credit history are factors frequently used to calculate credit scores

Many people are surprised to find out they don’t have just one credit score. Credit scores will vary for several reasons, including the company providing the score, the data on which the score is based, and the method of calculating the score. 

Credit scores provided by the three major credit bureaus -- Equifax, Experian and TransUnion -- may also vary because not all lenders and creditors report information to all three major credit bureaus. While many do, others may report to two, one or none at all. In addition, the credit scoring models among the three major credit bureaus are different, as well as those used by other companies that provide credit scores, such as FICO or VantageScore. 

The types of credit scores used by lenders and creditors may vary based on their industry. For example, if you’re buying a car, an auto lender might use a credit score that places more emphasis on your payment history when it comes to auto loans. In addition, lenders may also use a blended credit score from the three major credit bureaus.

In general, here are the factors considered in credit scoring calculations. Depending on the scoring model used, the weight each factor carries as far as impacting a credit score may vary.

• The number of accounts you have
• The types of accounts
• Your used credit vs. your available credit
• The length of your credit history
• Your payment history

Here is a general breakdown of the factors credit scoring models consider, keeping in mind there are many different credit scoring models.

 
Payment history
When a lender or creditor looks at your credit report, a key question they are trying to answer is, “If I extend this person credit, will they pay it back on time?” One of the things they will take into consideration is your payment history – how you’ve repaid your credit in the past. Your payment history may include credit cards, retail department store accounts, installment loans, auto loans, student loans, finance company accounts, home equity loans and mortgage loans.

Payment history will also show a lender or creditor details on late or missed payments, bankruptcies, and collection information. Credit scoring models generally look at how late your payments were, how much was owed, and how recently and how often you missed a payment. Your credit history  will also detail how many of your credit accounts have been delinquent in relation to all of your accounts on file. So, if you have 10 credit accounts, and you’ve had a late payment on 5 of those accounts, that ratio may impact credit scores.

Your payment history also includes details on bankruptcies, foreclosures, wage attachments and any accounts that have been reported to collection agencies. 

Generally speaking, credit scoring models will consider all of this information, which is why the payment history section may have a big impact in determining some credit scores.

Used credit vs. available credit

Another factor lenders and creditors are looking at is how much of your available credit – the “credit limit” – you are using. Lenders and creditors like to see that you are responsibly able to use credit and pay it off, regularly. If you have a mix of credit accounts that are “maxed out” or at their limit, that may impact credit scores. 

Type of credit used

Credit score calculations may also consider the different types of credit accounts you have, including revolving debt (such as credit cards) and installment loans (such as mortgages, home equity loans, auto loans, student loans and personal loans).

Another factor is how many of each type of account you have. Lenders and creditors like to see that you’re able to manage multiple accounts of different types and credit scoring models may reflect this.

New credit

Credit score calculations may also consider how many new credit accounts you have opened recently. New accounts may impact the length of your credit history.

Length of credit history

This section of your credit history details how long different credit accounts have been active. Credit score calculations may consider both how long your oldest and most recent accounts have been open. Generally speaking, creditors like to see that you have a history of responsibly paying off your credit accounts.  

Hard inquiries

"Hard inquiries" occur when lenders and creditors check your credit in response to a credit application. A large number of hard inquiries can impact your credit score. However, if you are shopping for a new auto or mortgage loan or a new utility provider, the multiple inquiries are generally counted as one inquiry for a given period of time. That period of time may vary depending on the credit scoring model, but it's typically from 14 to 45 days.

Credit score calculations do not consider requests a creditor has made for your credit report for a preapproved credit offer, or periodic reviews of your credit report by lenders and creditors you have an existing account with. Checking your own credit also doesn’t affect credit scores. These are known as “soft inquiries.”

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