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What is a credit score?

People in Tennessee use credit cards for a number of reasons. Some people use credit cards because they do not have access to the cash they need to pay for things. Other people use credit cards in order to take advantage of card benefits. No matter why an individual uses credit cards, they need to understand that credit card use is closely tied to a person's credit score.

A credit score determines a person's access to credit in many ways. The credit score is used to determine how creditworthy a person is. In other words, it is used to determine how much credit a person should have access to. A credit score is also used to determine the likelihood that a person will make payments on time or otherwise repay a loan when it's due.

According to the Federal Trade Commission, a credit score is created using a variety of credit reporting tools. These tools explain a person's credit experiences and history. Financial information is used to make these determinations. This financial data includes the number of credit accounts a person has, any collection actions, any outstanding debt and the age of individual's accounts. It also takes into account whether not people pay their bills on time and whether payments are made frequently. People receive points for each of these factors that are totaled to create a credit score.

A person's credit score is closely tied to their credit report and credit history. If people have credit card debt which affect their credit reports, this can lower their credit score. With a lower credit score, individuals may have a harder time accessing credit or may have to pay higher interest rates.

People who are suffering from overwhelming credit card debt should understand how a credit score works. They also need to understand debt relief can change their credit score. For example, filing for bankruptcy can lower a person's credit score. However, this drop in the person's credit score may be worth it as individuals try to move past it difficult financial period. An attorney in Tennessee can give residents specific legal advice about debt relief and rebuilding credit after a bankruptcy.

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Kenneth C. Rannick, P.C.
4416 Brainerd Road
Chattanooga, TN 37411

Phone: 423-624-4002
Toll Free: 800-257-7594
Fax: 423-624-0509
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