Dollars & Sense: What you need to know about credit scores

Almost anywhere you click on the internet these days, somebody is offering to provide you with your credit score. 
It’s not as simple as it sounds. 

First of all, we wanted to find out exactly what a credit score is.

"A credit score basically is a three digit number that lenders use to assess credit risk.  It’s calculated based off of numerous factors and criteria based off of a person’s credit history," said Lance Oribio of Central Pacific Bank.

And your credit score can be affected simply by how many times and by whom it is requested.
Why is a credit score important?

"Credit score is one of the key elements that lenders use for many things involving a credit decision.  It impacts the loan amount, impacts the rate you receive and it can impact your monthly payment as well," Oribio says.

How do you get a bad credit score?

"If you don’t pay your creditors on time, that’s going to hurt your score.  But it could be other things too, such as running up your balances up to their limits on your credit cards, or just applying for too many things like too many credit cards," Oribio says.

But there are positive things you can do to improve your credit score.

"Improving your credit score takes time and it takes discipline.  Secondly, I think people should just do simple things – setting up an automatic payment to avoid late payments and other things such as checking your credit report once a year," Oribio says.

The three credit reporting agencies are Equifax, Experian, Transunion.