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Understanding Your Credit Score
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Understanding Your Credit Score
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What is a Credit Score?
A credit score is used by creditors to determine how good a credit risk you are. It has predictive value for telling the lender how likely you are to repay a loan or to make payments on time. The credit score is calculated using information in your credit reports. Usually each person living in the United States who has a Social Security number, whether a citizen or not, will have three versions of credit reports to their name. Equifax, Experian and TransUnion are three companies that collect your credit information and provide your credit report (also known as credit profile) to your lenders/creditors.
The credit score is based on a model derived from analysis of past credit history of thousands of people. Based on the collective "credit history" of thousands of people with financial profile similar to yours, the credit score tries to estimate your future behavior in respect to repayment of your loans, making timely payments, etc.
How can I get my Credit Score?
Currently, the only way to obtain your official FICO® score, the same one used by most credit companies, is by ordering a Score Power(TM) report from Equifax or Fair, Isaac & Company at www.myfico.com. The Score Power report includes your FICO score, a personalized score explanation with tips on how to improve your credit score, and your Equifax credit report.
Equifax is the only national credit bureau that at the present time provides online availability of consumer FICO credit scores!
Below is information provided by Fair, Isaac, the company who brings you FICO credit scores. There are five main categories of information on your credit report that are used in calculation of your credit score, along with their general level of importance. Within these categories is a complete list of the information that goes into a FICO score. Be aware that:
A score takes into consideration all these categories of information, not just one or two. No one piece of information or factor will determine your score.
The importance of any factor depends on the overall information in your credit report. For some people, a given factor may be more important than for someone else with a different credit history. In addition, as the information in your credit report changes, so does the importance given any one factor in determining your score. Because the details of your financial situation are unique, and the exact formula used in calculation of your credit score is kept secret, it is not possible to predict what factors will bear the most weight in your situation. Thus, it's impossible to say exactly how important any single factor is in determining your score — even the levels of importance shown are for the general population, and will be slightly different for different credit profiles. What's important is the mix of information, which varies from person to person, and for any one person over time.
Your score only looks at information in your credit report. Lenders look at many things when making a credit decision, including your income and the kind of credit you are applying for. However, your FICO score does not reflect these facts, as it only evaluates your credit report at the credit reporting agency.
Your score considers both positive and negative information in your credit report. Late payments will lower your score, but having a good record of making payments on time will raise your score.
Your score does not consider your ethnic group, religion, gender, marital status and nationality. These are, in fact, prohibited from use in scoring by US law.
New! Now You CAN obtain and see your credit score.
There are two options.
Equifax
is the only National credit bureau that at the present time provides online availability of consumer credit scores!
The company
TrueCredit uses a logarithm that provides complete analysis of your creditworthiness, which is equivalent but not the same as your credit score. Look at their product
TrueProfiler which can be obtained with a credit report.
BE AWARE
A score takes into consideration all these categories of information, not just one or two. No one piece of information or factor will determine your score.
The importance of any factor depends on the overall information in your credit report. For some people, a given factor may be more important than for someone else with a different credit history. In addition, as the information in your credit report changes, so does the importance given any one factor in determining your score. Because the details of your financial situation are unique, and the exact formula used in calculation of your credit score is kept secret, it is not possible to predict what factors will bear the most weight in your situation. Thus, it's impossible to say exactly how important any single factor is in determining your score — even the levels of importance shown are for the general population, and will be slightly different for different credit profiles. What's important is the mix of information, which varies from person to person, and for any one person over time.
Your score only looks at information in your credit report. Lenders look at many things when making a credit decision, including your income and the kind of credit you are applying for. However, your FICO score does not reflect these facts, as it only evaluates your credit report at the credit reporting agency.
Your score considers both positive and negative information in your credit report. Late payments will lower your score, but having a good record of making payments on time will raise your score.
Your score does not consider your ethnic group, religion, gender, marital status and nationality. These are, in fact, prohibited from use in scoring by US law.
You cannot obtain or see your credit score. Only creditors are allowed to see your credit score. (Perplexing, isn't it? You cannot find out your own score but any company that wants to grant you credit can find out YOUR score with no effort.) Currently, the only option you have is provided by the company TrueCredit. They have created a logarithm that provides complete analysis of your creditworthiness, which is equivalent but not the same as your credit score. Look at their product TrueProfiler which can be obtained with a credit report.
If debt has gotten out of control, seek help from a credit counselor.
Don'ts:
*Don't overdraw your bank account. It's a bad way to start your credit history.
*Don't miss payments on bills or loans. Even late payments count against you.
*Don't let other people use your bank account, gasoline card or store credit card.
*Don't leave utilities (gas, water, phone, electric) in your name if you move. If it's in your name, it's still your responsibility.
*Don't forget about recurring bills on your credit card, like subscriptions or club dues.
Conclusion: We hope this information will help you to establish, re-establish or keep good credit history. Read about the value of good credit score and credit history and the price you will pay if it is bad in our Credit Score: the Blessing and the Curse
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Who keeps your credit history?
There are three major companies that are in the business of collecting and distributing credit histories on all Americans. If you're an average American, it is very likely that all three companies keep your credit history. They are competitors, which means that each company has a different version of your information. This makes it necessary to obtain reports from all three companies--to make sure that none of them has erraneous information in their files.
Equifax Online availability!
Experian
Trans Union
A few companies specialize in providing Credit Reporting to consumers. They supply credit reports from all three credit reporting agencies. Some of such companies are:
Equifax, is a national Credit Bureau that provides online credit reporting along with your FICO credit score. They give you an option of ordering a credit report or signing up for a free 30-day trial of their Sentinel Credit Monitoring service.
Visit Our Credit Reports Site:
 Credit Reports
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