What are credit scores?
• Credit scores are simply numbers generated by a Credit Reporting Company based on your personal data provided by a Credit Repository. Equifax, Transunion, and Experian ARE NOT credit reporting companies! They are the repositories, or bureaus. They collect and provide your personal credit information to the reporting companies. In the mortgage industry for instance, a credit reporting company would be First American Credco. Another one is Landsafe. On the same day for the same person, Credco and Landsafe might pull two different sets of scores based on the particulars of their equations (though they should be very similar). At any rate, the credit reporting company applies a proprietary equation to the data provided by the bureaus. The CREDIT SCORE, is a number that is generated by that equation. It is meant to represent your risk of default on a loan. The higher the score, the lower risk you are. Though I do not know the exact way credit reporting companies calculate the score, here
Credit scores are determined by a number of factors. Each of these factors contribute to a potential lender’s view of how likely you are to pay back your loan on time. A lender computes credit scores based on data received from TransUnion, Equifax and Experian, which are the three major national credit reporting agencies. View your credit report and score now.
A6: A credit score analyzes your credit history by considering the following factors: late payments (35%), the amount of credit established (35%), the length of time at your present residence, employment history, collections, and bankruptcies (15%). A lender will take into account your credit score when qualifying you for a loan. Lenders generally utilize an A- through D (or comparable) credit ranking system.
Essentially, your credit scores are an estimation of your creditworthiness. These appear on your credit report with FICO being the most well-known rating. Your FICO score is computed by the credit reporting agencies based on factors such as the amount of current and past credit, payment history, late payments, and others.
Many lenders rely on FICO (Fair Isaac Company) scores to determine the credit worthiness of a potential borrower. These scores appear on your credit report. The FICO score is based on a mathematical model and is calculated by the credit reporting agencies based on the amount of current and historical credit, payment history, late payments, etc. Lenders frequently use an average of the FICO scores to determine credit worthiness.
