Credit Score - What Is It? Why Should I be Concerned?
Credit Score-What is it?
Your score is now the most important factor that lenders use to evaluate your creditworthiness. Your credit score is a three digit score calculated by the credit bureaus from your credit history.
The score was invented by Fair Isaac, a company that created a way to predict your chances of credit failure using just your credit report. This system has gained more popularity in recent years and now each of the three main credit bureaus, Equifax, Experian and TransUnion uses Fair Isaac's system to calculate their version of your score.
Nowadays, people applying for home loans or car loans are nothing but a "number" - their credit score. For example, our credit scores at the time of this writing were TransUnion: 735, Experian: 715, and Equifax: 722.
On each credit report are four or five risk factors that determine that particular credit report’s score. Here are some of the most common risk factors that affect your score:
Too many accounts with balances
Proportion of balances to credit limit too high
Length of time accounts have been established
Serious delinquency and public records or collection filed
Too many revolving accounts
There are more risk factors, but the above list seems to occur most often.
If you have difficulty understanding your credit report, see our contact page. I also have a credit repair forum you can be a member of to help in your credit repair.
Just a few adjustments can make a drastic lifelong change to your financial future such as:
Late payments
Collection accounts
High balances on revolving accounts
Too many inquiries
Credit history is too short
No credit history
You need to know what is the cause of the low score and what you may be able to do to improve it.
To read more about your
credit score, please click here.
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