What is a Credit Score?
A credit score is a complex mathematical model that evaluates many types of information in a credit file. A credit score is used by a lender to help determine whether a person qualifies for a particular credit card, loan, or service. Most credit scores estimate the risk a company incurs by lending a person money or providing them with a service specifically, the likelihood that the person will make payments on time in the next two to three years. Generally, the higher the score, the less risk the person represents.
A credit score is a complex mathematical model that evaluates many types of information in a credit file. A credit score is used by a lender to help determine whether a person qualifies for a particular credit card, loan, or service. Most credit scores estimate the risk a company incurs by lending a person money or providing them with a service specifically, the likelihood that the person will make payments on time in the next two to three years. Generally, the higher the score, the less risk the person represents. How can I get my credit score? You can purchase a credit score by contacting one of the nationwide consumer credit reporting companies. Equifax – www.equifax.com Experian – www.experian.com TransUnion – www.transunion.com You can also purchase a credit score when you request your free annual credit report through this website. What about companies that claim they can improve my credit report for a fee? The Federal Trade Commission (FTC) cautions consumers to be wary of compa
Credit scoring is a system used by lenders to give them an idea of how much risk they would be taking on by lending you money. The system works by you accumulating a number of ‘points’ based on your lifestyle. Every lender has criteria for what is an acceptable credit score. Your score is determined by a computer system so there is no way of calculating what it is before an application is sent to a lender and as you may expect you could have a high credit score with one company and a low credit score with another. There are however some lenders that do not use credit scores. Many factors will affect your credit score and these can include: • The amount you owe – for example if you are near to your credit limit your credit score may be affected. • Your payment history – if you have a history of late payments on other credit this will adversely affect your credit score. • Length of credit history – the longer the record then the more information the lender has in order to assess you. An
A credit score allows a lender to help determine the creditworthiness of a borrower to repay the loan. The score is usually determined by choosing the middle score of the three different credit reporting bureaus. The higher the credit score, the better. You can obtain a copy of your credit report by logging onto several websites offering the service. However, not all of them offer the actual credit scores. MyFico.com is a service that provides your liability information along with your credit scores.
Companies have built formulas to turn the information in your credit report into a number that represents how much of a credit risk you are. These numbers are called credit scores. Most credit scoring systems use the same numerical range which is between 300 and 850. A higher score is better, and indicates that you are less of a credit risk. The distribution of credit scores in the U.S. according to Fair Isaac, the company that produces FICO scores (the most widely used credit scores), is as shown below: Credit scores are an extremely important part of how lenders evaluate the likelihood that you will pay back your loan on time, but they also use other information when deciding whether to grant you credit and how much to grant you. While different creditors will evaluate scores differently and there are no hard and fast rules, some general guidelines for what scores mean are shown below. Keep in mind that other factors will also affect the type of credit you might be eligible for. • Ov
