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Before you apply for any credit from any financing institution, it is important to take a pause and reflect on the credit rating as it will play a very significant role in determining whether or not you get your application approved. Even when your application gets approved, the interest rates charged on your card will be further influenced by your credit rating.

The credit rating is calculated based on the consumer credit reports from the consumer credit reporting companies on all the transactions that you have had in the past. This calculation is meant to give the breakdown on how your payments have been over the last transactions that you have been involved in and is then used to project a judgment on the chances of you paying for any new debts that may come your way. It is due to the fact that credit financing is a risky business that could result n lots of losses for the credit card service providing companies if they advance credit to people who end up not paying for the service in time.

When calculating the credit scores, the companies and lenders have a pattern that they follow to get their figures which they will subsequently use to get at your score. All the figures are compiled by taking the reports from three of the consumer credit reporting companies. The figure is calculated in a school like kind of style with different points amounting to certain points in the score.

It is important to note that the figure ranges from about 300 to 850 depending on the information obtained from the credit reporting companies. It is also important to note that the credit score form all the three reporting companies can be different even though they may be reporting on the same person. This is basically because the reports are a compilation of information from the people with whom you have conducted business over a period of time. As a result, one reporting company may have information obtained from one lender and another obtained from a different lender hence the possibility of different scores.

The score has a breakdown in percentile as follows, 35% of the score is compiled from information on the payment history of the individual. This is a very important part of the whole process and constitutes that largest percentage as every lender is interested in knowing how you handle your payments before they can decide whether or not to consider you for any financing. The other sector is outstanding debts and constitutes 30% of the entire score. At this point, it is good to maintain all cards that you have well serviced and do not leave cards that have reached their limits un-serviced as this will lower your rating. It will do your rating great good if you maintain all cards at about 25% of their limits or less.