You just want to get a loan and suddenly you are bombarded with all this questions about your credit score. And you dont really know what to answer since you dont even know what a credit score is.
A credit score is your credit grade, representing how much of a good creditor you are. This score is dependent upon your credit history and credit report information, which is gotten from credit bureaus and credit reference agencies such as Equifax and TransUnion. Banks, credit card companies and lending companies use the credit score to have an idea if a person will pay what they borrowed in time. These scores will help these companies calculate their risk and determine if you will be lent to or not.
Another use for the credit score is to determine how many percent interest rates will be given to the borrower and what will be the terms of payment. People with high credit scores will be given more time frame to pay their debts and much lower interest rates.
A person with a not so good credit score may be given shorter terms in their payments but high interest rates. This is because they are riskier to lend money to so the banks and lending companies would want to get a high interest from them at shorter periods of time.
Because of the importance that credit score information gives to companies, banks and lending companies are now not the only ones that use these information. Even mobile phone companies, insurance companies, and private companies also use this information to check on the background of their clients and potential employees and see their character.
There are actually a lot of ways to determine what a persons credit score is. One of the most popular is the FICO score which was created by Fair Isaac Corporation. FICO is being used by lenders of mortgages to determine which borrowers are likely to default on their payments. A FICO credit score can range from to .
When before only financial institutions have access to their credit score, now it is being commercialized. Equifax is actually offering consumers a glimpse of their FICO score through their website for a fee, $.. The same goes with other credit bureaus such as TRansUnion and Experian but what they are offering is not the actual FICO score but their own scores.
Both companies however swear that their scores are comparable to the FICO scores. Experian charges the same price as Equifax for their score, $. while TRansUnion charges $. for a credit report that will also have the credit score. This can be purchased by mail, through phone and of course, the easiest course, online.
Some however do not see the need to buy these things as they are entitled to a free credit report from each of the three agencies. Some states even give a free credit reports within days of being rejected of a credit by a lending institution or when they receive a not so good credit terms because of their credit score.
- The Meaning of A Credit Score
- A credit score is not the amount of purchase that you incurred with your credit card and neither does the term refer to the points that you save for every purchase that you make with the credit card. This is not the meaning of a credit score. Although it does involve credit per se, it does
- Facts About Credit Scores
- To people who are not familiar with the term credit score, they often assume that this is the score that we get in our credit cards for the number of purchases that we have made every year. But nothing is further from the truth. Credit scores are actually the grade that you get depending on
- Understanding Your Credit Report Score
- Understanding your credit score is important since it may help you determine your chances of being approved on your credit applications. Your credit reports score usually will help lenders and credit institutions to determine if you are good enough for credit that you have applied for. Lenders would need to be ensured that people they
- How to Raise Your Credit Score
- A credit score is an important part of your financial profile. This is because a credit score will determine whether lending institutions and banks will let you borrow money or not. This is especially important to people who would want to borrow money to put up a business. With a bad credit score, it is
- What Is a Good Credit Score
- Your credit score has a profound effect in terms of the interest rate you will be paying when you apply for a loan. This is the basis that lenders use to determine if you will be able to pay for the amount in the future and if you need money to pay for college or