Your credit score helps your creditors determine your likelihood of paying off their money back if they choose to lend you money or extend you credit. But in recent times, credit score is not only considered as a loan decision number, it has been used widely by the insurers, land lords, employers and even utility service. Thus, a credit score is an important numerical number that affects each and every aspect of your life and it is of you must be aware of all the facts regarding this three digit number.
Given below is an array of important information that you must know:
Each of the three main credit bureaus: Equifax, Experian, and TransUnion assign you a credit score. Even though all of them use information included in your report, but still you will see a difference in your scores between the three bureaus. The reason for this discrepancy is that all of your creditors do not report to the same bureau.
The FICO score is the most popular score used by the lenders. It ranges from 300 to 850. The higher your FICO score, the harder the lenders will be eager to do business with you. However, if you have a not so perfect score, then you will be facing lot of troubles in getting your loan application approved and even if you get it approved you will be charged with hefty interest rates.
Another thing that you should remember is your score is fluid i.e. it changes based on the information reported by your creditors at the end of each month. Therefore, any change in your report due to a reported financial transaction could impact your score heavily.
Knowing the different factors used by the bureaus to determine your credit score can give you the tools to improve your scores. Credit bureaus weigh factors such as: Your payment history ; how long have you had accounts opened; what is your credit limit and how much are you using; what types of credit accounts do you have; how many recent accounts have you opened and how many recent credit inquiries you have made.
