Credit Scores: Here Are The Basics!Everybody at some point in their lives will apply for credit, whether they want to buy a new car, their first home or a computer. But there are many people who don't know there is a special number which can influence whether they can get the things they want, or just how much it is going to cost them. Credit scores produced by many of the credit reporting agencies such as Experian or Equifax is a 3 digit number which can limit what you can have when it comes to applying for some form of credit. If you have read about how a credit report works then you will know that it contains specific information about your credit history. For example, how you have paid your bills, how much open credit you have, and any other financial information which may affect your ability to get credit. Credit reporting agencies use this information to calculate your FICO credit score. This score helps potential lenders weed out people with a low credit score. The 3 digit number that also helps lenders identify the risk which they may be taking if they lend to a certain person. Although they can also receive the same information from a credit report, a lender will often use a credit score as it is not only quicker to produce but is also less subjective. Each credit score system awards a person with points based on the information showing on their credit report. And they use the score to compare with scores from other consumers who have a similar profile. Once the lender has this information they are then able to predict the likelihood of someone not only making repayments on time, but also on them repaying the loan in its entirety. It is a person's scores which make it possible for them to get an instant line of credit in such places as department stores and electrical goods stores. The most common of all methods used to produce a person's credit score is that known as FICO. The Fair Isaac and Company originally designed the method and it serves the credit industry well. Also, the method is free of influence from the lending institutions who regularly use it. Fair Isaac created a software package which is used not just by banks, but lenders, insurers and other businesses today. Also, all three of the major credit reporting agencies were using the FICO system in the early 1980's to produce credit scores. But it is only Experian who still use the FICO system in its original state, the others such as Equifax and TransUnion use systems that are only based on it. Fico Score >> Privacy Policy >> Disclaimer >> Terms Of Use >> About Us >> Contact Us |