Your credit report score, also called as credit history or credit reputation, is
a record of your credit history -- borrowing and repaying. Lenders use your
credit history to determine how likely you are going to pay your bills on time.
The higher your credit score, the better chance you’ll have to get approved for
a loan. With a high credit rating you can get a lower interest loan.
Considering the impact of credit report on your financial life, there is no
reason why you don't want to learn as much as you can about it. What is a credit
score? What institution is responsible for coming up with these three digit
figures? Here, you will find answers to various questions related to credit
report and credit score.
What is a Credit Report Score?
This is a three-digit number -- more or less reflects your future credit
performance -- that is generated by a relative scoring formula based on
information found in your credit report and then compared to information from
tens of thousands of individuals. The information includes payment history,
available credit, existing debts, new credit lines, and many more.
In the credit economy a credit report score indicates a person's creditworthiness or
credit reputation -- the information that lenders can depend on to make
decisions regarding the person's credit application. If your credit report
reveals that you pay your bills on time and have decent amount of credit
available in your account, the lenders would approve your loan application.
However, if you have a credit score that is below average -- normal range is 300
to 800 and 720-above considered as good scores -- then lenders may not let you
borrow more credit. Or, if your application gets approved, it would be for less
favorable loan terms and interest charges.
Who Calculates Credit Report Scores?
Fair Isaac Corporation was the first company that develops a credit scoring
system -- a system of assigning value to your credit standing. The score was
named the FICO score. Today the FICO credit score becomes the standard and the
most trusted credit score used by the three major credit bureaus namely,
Equifax, Experian and TransUnion.
There are other credit scoring systems offered by different consumer reporting
services. Since these companies have their own system of calculation of credit
rating this means that you have more than one credit score. When you apply for a
loan, lenders would request to access your credit report from any of these
credit reporting agencies and sometimes they request from more than one of the
major credit bureaus.
Free Credit Report and Score
The Fair Credit Reporting Act (FCRA) lets every citizen of the United States to
obtain a free credit report from each of the three major credit reporting
agencies once every 12 months.
For inquiries about how you can make your request, just visit
AnnualCreditReport.com. You will need to provide the following information:
name, address, social security number, and date of birth. The information will
be used to verify your identity and to protect your free credit report and score
from would-be identity thieves and con artists.
Aside from getting free credit report and score from the AnnualCreditReport.com,
the credit bureaus are mandated by law to provide you free credit reports if you
have been denied credit in the past 60 days, you are unemployed or on welfare,
and your report contains inaccurate information due to fraud.
So, if credit is your main financial sources it is wise that you regularly check
your credit report score. By keeping track of any errors, mistakes or
inaccuracies that could lower down your score you will be able to maintain a
good credit score. With a good credit report score you'll be get the loan that
you need every time you apply for one.
