If you have recently received your report and found that you have a 650 credit score, you may be troubled and perhaps even slightly confused. Why does it matter what the score is? Which credit bureau must you believe? What factors influence your result? Should you even be concerned? Why does it count what the score is?

When a new lender browses through an application for credit card debt, credit score is one of the factors they will use to assess whether to lend the cash in the first place. If they decide to grant the facility, your report will affect the line of credit and interest rate you get charged. The higher the score the lower the rate of interest you will pay and you may be awarded a higher borrowing facility. But it is not just credit card applications that it influences.

When you come to renew your car insurance or your home insurance, your insurer will also look at your credit score and may increase your premiums if he sees you to be a higher risk than someone with a higher score.

Which credit bureau will you believe? Your Experian credit score will be slightly different than the Transunion credit score which again may vary from the Equifax one. This is partly because there is no one defined way to calculate this figure and partly because all 3 credit agencies use slightly different information to compile your credit report. You are best working on an average of the three scores. Whatever you can do to improve your rating will have a favorable effect on all three bureaus.

What factors influence your result? Before you can think about raising it, you need to know what factors affect it. The score itself is based on a lot of factors but those that seem to have the most influence are

1. Payment history - you need to be sure that the reports filed are accurate as often mistakes are made. It is estimated that this alone accounts for up to 35% of your score therefore it is important it is correct.

2. Amount you owe compared to the credit limits you already have - if you are maxed out on your credit cards, your rating will suffer. So try to bring those balances down. It is recommended that you keep them to below 35% of the available credit which is easier said than done! When it comes to credit score 650 is not a high enough number so you have to do all you can.

3. Number of borrowing applications - the more applications for borrowing you submit the more your rating is going to be adversely affected. Never apply for any new borrowing except if you really need it and be selective who you apply to. Pick the lender with whom you have the most chance of success.

Should you even be concerned? Indeed, yes and yes. Now you know the answer to the question is 650 a good credit score? Your credit file has an impact on various areas of your life. You can improve it if you adhere to the proper advice. Steer clear of any "experts" who want to charge you fees for fixing your report. You can easily do yourself and you need all those extra dollars to get rid of the debt once and for all.

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