3 Credit Scores

3 Credit Scores 

Credit scores are a statistical expression built on a numerical analysis of an individual’s credit records to signify the creditworthiness of that individual. Credit scores are mainly built on credit report data usually from credit bureaus.

Lenders like credit card companies and banks use the credit scores to gauge a possible risk to lending to a consumer who may have bad credit or problems paying his debt. Lenders will use the consumer’s credit scores to determine if the consumer is qualified for a loan in addition to attaching what rate of interest and the credit limit for the requester of credit.

The scores of credit bureaus are frequently titled “FICO scores” due to the fact that the majority of scores from credit bureaus that are utilized in the US are from a particular software created by Fair Isaac and Company. The FICO scores are given to lenders by the main credit reporting companies.

Consumers have 3 credit scores, or FICO scores – one score from each of the three main credit companies: Equifax, Experian, and TransUnion. The 3 credit scores are based on data that the credit bureau has on their record about the consumer. If a consumer’s FICO score is calculated to a low number, there are steps that he or she can take to improve his or her FICO score which will help the consumer be qualified for better charges.

Additional Credit Scores

There is more than one score in the world of credit scores. When people speak about an individual’s credit score they are speaking about his or her present FICO score. The fact is that there is not just one credit score that is used to make lending decisions because:

  • FICO scores aren’t the only scores from credit bureaus

Even though the FICO scores are used the most, there are scores from other credit bureaus. These scores may appraise an individual’s credit report another way than FICO scores, but the individual could run a higher risk of different scores

  • The scores of credit bureaus aren’t the only scores that are used.

Quite a few lenders have their own scores of crediting that often includes FICO scores in addition to other personal data

  • FICO score could change in time

As an individual’s information changes, so do the credit scores, which cause his or her FICO score to change.

  • Credit scores may differ from the main agencies

There is a chance that an individual’s present scores differ from the other agencies because they have different information on the individual.