What is a Credit Score
What is a Credit Score?
A Credit Score is a number which is calculated, utilizing some
sophisticated statistical algorithms, based on your recent (e.g.,
last two years or so) payment history, history of managing your
credits and behavior of paying your loans, credit card, store charge
cards, and bills. The Credit Score Number
predicts likelihood of a person’s behavior and paying back the loans
over the near-term future based on the person’s recent payment
Credit scoring can help you understand your overall credit rating
and help companies better understand how to serve you. Overall
benefits of credit scoring have included faster credit approvals,
reduction in human error and bias, consistency, and better terms and
rates for consumers through reduced costs and losses for lenders.
While lenders may use different scoring models to determine how you
score, and each major credit bureau has its own method for
calculating credit scores, the scoring models have been fairly well
standardized so that a score at one bureau is roughly equivalent to
the same score at another.
There are three main credit bureaus in the United States. They are
Equifax, Experian and TransUnion. Each offers lines of
credit-scoring products, available for purchase on their respective
websites. Prices range from “free” to several hundred dollars. These
three credit bureaus score range from 330-830
very important to have a good/excellent credit history and credit
score. You also need to know what is in your credit reports and what
your credit score is.
you know your Credit Score? If not, you can find it through many
sources, such as:
www.annualcreditreport.com or contact the three major credit
bureaus, as their addresses and websites shown below, to retrieve
your free report under the FACT Act. You may also be entitled to
additional free reports, if you meet certain criteria. You can also
get your credit score by paying a nominal fee.
TransUnion Consumer Relations
PO Box 2000
Chester, PA 19022-2000
By Mail: By Mail:
Experian Equifax Credit Information
P.O. Box 2002 P.O. Box 740241
Allen, TX 75013 Atlanta, GA 30374
None of the above credit reports, however, are particularly relevant
in the home-buying process. This is because the nation’s Mortgage
lenders rely on a different credit model — the FICO model.
is named for the Fair Isaac Corporation. It was
“invented” in the 1950s and has become the mortgage industry
standard for credit ratings. Today, FICO scores are omnipresent to
the point that people generically refer to all credit scores
as “FICO scores”.
FICO is the brand name — not the product. FICO scores range from