Credit Rating Explained — How You Create a Credit Score & History

Understanding credit ratings: how your credit gets a score

Most people are aware that you need a good (or at least decent) credit rating in order to get credit cards, a mortgage or other lines of credit. But if you have no credit history, you may not have a credit score.

So how can you get a credit score if you can't get credit? There are ways to establish credit and get a credit score. But first, you should understand what makes up your credit score.

What factors make up your credit score?

Not all credit scores are the same. There are different scoring models, including CreditXpert credit scores™, VantageScore® and FICO™. Although each system has its own formulas to calculate credit scores, there are some basic similarities.

Most credit scoring methods:

• Use your credit history to calculate your score
• Rank your credit score in a range
• Assign higher scores to better credit profiles

The basic components of creating a credit score include:

• Bill pay history
• Amount of outstanding debt and available credit
• Length of credit history
• Recent hard inquiries (third-party inquiries) on your credit report
• Variation in types of credit used

Establishing a credit history

Even without a past use of credit, you may have already started building your credit history. When you are trying to establish credit, you may need to find methods to do this without qualifying for standard credit cards.

You can establish a credit history with:

• Bank accounts
• Apartment and/or utilities in your name
• Work history
• Residence history
• Gas and store cards
• Secured credit cards
• Charge cards (credit cards with no revolving credit - balance must be paid in full each month)
• Car or student loans
• Cosigning on an account with someone who has solid credit history

Protect your credit rating with credit monitoring

Once you have created a credit history and finally have a credit rating, you should do your best to protect it.

With a PrivacyGuard membership, it will be easier to keep an eye on your credit scores. The membership includes:

• Triple-bureau credit score
• Daily credit monitoring
• Monthly credit score tracking
• Identity theft protection

Protect your established credit. Enroll in PrivacyGuard today!