Good Credit Score and History – Understanding and Building

The following information can help you understand what a credit score is, how it is calculated, and what you can do to build it up or repair it. It is important to understand how credit scores work because this number is part of what determines whether you will be approved loan, a credit card or finance plan, and how low the interest rate will be. Since your good credit score is a major factor when getting credit, it helps to know and understand all of the different aspects of your credit score.

  • What is a credit score rating? – It is a predictive measurement of an individual borrower’s credit stability. What does this really mean?
  • Who Can Check My Credit Score? – Just who can check my credit score? If you’ve wondered that, you are not alone.
  • Elements That Determine Your Credit Score – When it comes to computing credit scores, you need to understand that there are 5 elements that determine your credit score.
  • How A Credit Card Affects Your Credit Score – Those shiny pieces of plastic can be the best thing in the world, or the worst, depending on your point of view.
  • Credit Score Stats – Understanding credit score stats can help you put your own rating into perspective.
  • Raising Your Credit Score -Your score helps determine whether you’ll be able to get credit and the interest rate you’ll qualify for.
  • Get your Credit Report plus all 3 scores – Free – Compare your Experian, Equifax, and TransUnion credit reports in one easy-to-read format.

What Is A Good Credit Score Rating?

What is a good credit score rating? It is a predictive measurement of an individual borrower’s credit stability. This number gives lending institutions a consistent and objective way to evaluate whether or not to extend credit. The credit scoring system evaluates the patterns of hundreds of thousands of past credit reports to identify common variables, such as the probability of a person defaulting on a loan, or becoming over-extended. By identifying consistent variables based on past credit history, the system can then predict future credit behavior.

Elements that determine how good your credit score is

Using a mathematical formula, your credit score takes into consideration your credit history, how you’ve paid your bills, how much open credit you have, as well as other factors that predict your credit worthiness. The formula then compares your information to the credit performance of other consumers with similar profiles to produce a three-digit number. Lenders use this three-digit number to determine whether or not to lend money, how much money to lend, and what interest rate will be charged.

How many credit scoring systems are there?

Your credit score may be different from lender to lender, depending on the credit scoring system that was used. Credit scoring systems all look at the details in your credit report. However, the systems look at the information slightly differently depending on what the score is being measured for, and where the comparative information is coming from. Below is a brief overview of the four main credit scoring systems.

  • FICO: The FICO credit score is provided by the Fair Isaac Corporation, which was founded in 1956. It is the most widely used credit scoring system, and is utilized in nearly three quarters of all mortgage lending decisions. My Fico, where individual can order their own credit scores, is the consumer division of the Fair Isaac Corporation.
  • Beacon Credit Scoring System: A Beacon score is the Fair Isaac Corporation (FICO) credit score calculated using information from the Equifax credit bureau.
  • Empirica Credit Scoring System: These credit scores are furnished by the TransUnion credit bureau, and are based on the FICO model using information from TransUnion credit files.
  • Experian/Fair Isaac Risk Score: This credit scoring system was developed by the Experian Credit Bureau and is based on the fico model, using Experian information.

Many major companies use credit scores in conjunction with other factors when making decisions about extending credit.

Who Can Check My Credit Score

Just who can check my credit score? If you’ve wondered that, you are not alone. What is disturbing to a lot of people is how many different industries use credit scores to make business decisions. For years, creditors have used credit-scoring systems to determine whether individuals are a good risk for mortgages, credit cards, and loans. But, did you know that other businesses also check your credit score when deciding to work with you or not?

The use of credit scores has grown over the years because it gives businesses an objective way to measure the credit risk of potential clients. Generally, the higher a person’s credit score is, the more likely they are to meet their financial obligations. This means less risk for the business.