Money Matters / October 2007
Your Credit Score
Understanding credit scoring can help you in many ways. Learning how your credit risk is calculated can help you take action to either get the best use of your score or to raise your score. A better score means better financial options.
A credit score is an estimate of your credit risk based on a snapshot of your credit report at a particular point in time.
The most widely used credit scores are FICO scores. Lenders use FICO scores to make billions of credit decisions every year. Fair Isaac develops FICO scores based solely on information in consumer credit reports maintained at the three national credit reporting agencies – Equifax, Experian, and TransUnion.
Equifax, Experian, and TransUnion, the three national credit reporting agencies, maintain files on millions of borrowers. Lenders making credit decisions buy credit reports from these agencies to determine the credit risk of prospects, applicants and customers.
Your three credit reports – one from each of the three credit reporting agencies – detail your credit history as it has been reported to each agency by lenders who have extended credit to you. Your credit report lists what types of credit you use, the length of time your accounts have been open, and whether you’ve paid your bills on time. It tells lenders how much credit you’ve used and whether you’re seeking new sources of credit.
You should review your credit report from each credit reporting agency at least once a year and especially before making a large purchase, such as a house or car. Everyone has the right to obtain one free copy of their credit report each year from each of the three agencies.
These are the numbers and web address to contact the three agencies. If you find an error, the credit reporting agency must investigate and respond to you within 30 days. If you are in the process of applying for a loan, immediately notify your lender of any incorrect information in your report.
Equifax: (800) 685-1111, www.equifax.com
Experian (formerly TRW): (888) 397-3742, www.experian.com
TransUnion: (800) 888-4213, www.transunion.com
FICO scores range from 300 to 850. The higher your FICO score, the less interest you will be required to pay on any financed purchase. Many lenders use FICO scores to help them make lending decisions, but each lender has normally established a scale on which they base their lending decisions. The higher your credit score, the better credit offers you will receive, the lower your interest rates, and the quicker you’ll get credit approvals for purchases.
If you have been turned down for credit, the Equal Credit Opportunity Act (ECOA) gives you the right to obtain the reasons why you were denied within 30 days. You are also entitled to a free copy of your credit report within 60 days. To get more specific information on what your score is and how you can improve it, go to www.myfico.com.
Copyright © 2001-2009 A Woman's View. All rights reserved.
Top • Home • Subscribe • Advertise • Submit • Distribution • Contact
Support Our Advertisers • Organization Resources • Women Owned Business
Organization Resource List • Women Owned Businesses • Support Our Advertisers
Maintained by TEABROOKE
Website Design | SEO | Social Media Consulting
Related Sites | XMLSiteMap | Web Portal
Landing Zone SEO - Website | Search | Usability | Results | Goodness
Send an Email About This Article