In US, every person who is earning and owns a bank account is assigned a score called “Credit Score” – this is a whole number between 300 to max of 850. This score is calculated mathematically based on an algorithm. The score is calculated based on various factors like

• How long ago you have opened a bank account/credit card accounts etc.? The greater the age since the account was opened, the higher the score
• What is your outstanding accumulation of loans that owe to banks? Consumer loan/Housing loan/credit card balances etc…
• Whether you have defaulted on paying any loans/installments or been paying on time
• # of bank accounts or credit card accounts etc.

It is vital to keep a high score as much as possible – the higher the score, it reflects a better financial stability and banks etc. would be willing to give loan at a lower % rate of interest.

When you apply for a new bank account/credit card/loan etc., a  credit check is done on your score to get the current scores (the credit check also reduces the score a little if a hard check is done) – so ensure you do not apply for loans or credit cards very frequently 🙂

Your current scores can be viewed in sites like creditkarma, Equifax, Experian etc.