Your Credit Report - Know Your Credit Score
We apply for credit for many reasons - maybe it's to buy a new car, house, computer, or get a student loan. Did you know, however, that there is a special number that can determine whether you can do these things, or at least how much it will cost you? Your credit score is a three-digit number that can do just that.
How can a single number be meaningful enough to determine whether you can buy a house or car? Your credit report contains a history of how you've paid your bills, how much open credit you have, and anything else that would affect your creditworthiness. Your credit score boils down all of that information into a three-digit number.
What is Credit Score?
A credit score is a number that is calculated based on your credit history to give lenders a simpler "lend/don't lend" answer for people who are applying for credit or loans. This number serves as a standard gauge of your creditworthiness for lenders and traditionally the most mysterious component of your financial profile, become available to consumers for the first time. Gone are the days when loan officers used only credit reports to decide whether to grant a loan application. The idea of credit score was developed about 20 years ago by Fair, Isaac and Company (FICO). The system awards points based on information in the credit report, and the resulting score is compared to that of other consumers with similar profiles. With this information, lenders can predict how likely someone is to repay a loan and make payments on time. It's the credit score that makes it possible to get instant credit at places like electronics stores and department stores.
The credit score are ranging from 300 to 850 that is calculated from data that your creditors supply to the credit bureaus, which are then recorded in your credit report. The idea behind scoring models is that past performance is indicative of future behavior. The higher your score is, the better the statistical odds that you will repay a loan. The lenders generally consider a score in the 700s to be easy score to underwrite. A score that’s, say, 100 points below 700s is more problematic. Why? According to FICO’s forecast model, the delinquency rate for people with scores of 750 is about 2%; scorers with 630 have a delinquency rate of 31 percent.
Your FICO score is not the only score available, however. There are actually two types of scores, custom scores and bureau scores. The FICO score is the most widely used among institutional lenders. There are three national credit bureaus each have their own version of the FICO score with their own names. Equifax has the Beacon system, TransUnion has the Empirica system, and Experian has the Experian/Fair Isaac system. Each is based on the original Fair Isaac FICO scoring method and produces equivalent numerical results for any given credit report. Some lenders also have their own scoring methods. Other scoring methods may include information such as your income or how long you've been at the same job.
Credit Score Criteria
Here are the chart of credit score criteria and the weight it carry in determining your score:
Get Social, Bookmark Us!
|
|
|
Online Resources
|
Debt Free In Three Years  “No matter how deep in debt you are and no matter how much money you’re earning, you can certainly be debt free in 3-5 years! My system has a whopping 97% success rate! Why struggle financially, forced to pay mammoth bills for the next 35 years of your life – when you can be free from paying them in only 3-5 years! Get More Information |
|
|
