Posted on: 08th Apr, 2004 11:30 pm
A credit score is a 3 digit number that tells a creditor how creditworthy you are and how likely it is that you'll repay the credit once it is extended to you. These scores affect the interest rates you receive on mortgages, auto loans, credit cards, etc. In addition, when you go for an insurance policy or apply for a job, the insurer or employer may look at your credit scores. Even when you're looking to rent, your landlord would prefer it if you have a good credit/FICO score.
What is FICO score?
A FICO score is calculated on the basis of the FICO Scoring Model developed by the Fair Isaac Corporation. In most cases, when people talk about their credit scores, their FICO credit score is what they mean. Consumers can access different versions of the FICO score at the 2 bureaus - Equifax and TransUnion. These scores are known as the Beacon score and Empirica score.
Consumer FICO scores calculated by Experian are sold to lenders only and consumers can't access them. However, consumers can find their credit scores (based on Experian data) online at Experian. They can even request a free credit report from Experian, just like from other bureaus.
Consumer FICO scores calculated by Experian are sold to lenders only and consumers can't access them. However, consumers can find their credit scores (based on Experian data) online at Experian. They can even request a free credit report from Experian, just like from other bureaus.
What is a good credit score?
Usually FICO credit scores range from 300 to 850. The higher your score is, the lower the risk to the creditor is when offering you a loan. A FICO score equal to or above 700 is considered a good credit score which will qualify you for some of the best deals at affordable rates.
What is a credit score chart?
A score chart helps you get an idea of credit score ratings based on the credit scores you have. The credit score chart is given below:
- 730+ - Excellent
- 700 - 729 - Good
- 670 - 699 - Needs a closer look
- 585 - 699 - Higher risk
- Below 585 - Limited credit history
Can you get a free credit score?
Under the Fair Credit Reporting Act (FCRA), anyone is entitled to a free copy of their credit report once a year from each of the bureaus; but free credit scores are not available. You'll have to place an order with the bureaus and pay a fee (set by the Federal Trade Commission) if you'd like to get your credit score. You may apply for your credit scores online at www.annualcreditreport.com or contact them at their toll free number 877-322-8228.
What is the Credit Scoring system?
It's a system where the credit bureaus figure out your scores based on the information that is available from your credit report. The bureaus use a statistical program to compare the loan repayment history of consumers with similar profiles. Then they award points for each item that helps find the consumers who can easily pay down a debt. The total number of points adds up to your credit score.
Why do credit scores or FICO scores vary?
The major credit bureaus - Equifax, and Trans Union follow the FICO scoring model (developed by Fair Issac Corporation) to calculate a FICO score. But scores differ because they use minor variations in the FICO Scoring Model as well as assign different points to each item on your credit report.
Not all lenders/creditors and collection agencies will report your credit information to the same credit bureau. Therefore, the credit score you get from one bureau may differ from what you receive from another. In addition, your credit scores changes from time to time based on your credit transactions. So, make sure that your creditors update the bureaus with your latest credit details.
Not all lenders/creditors and collection agencies will report your credit information to the same credit bureau. Therefore, the credit score you get from one bureau may differ from what you receive from another. In addition, your credit scores changes from time to time based on your credit transactions. So, make sure that your creditors update the bureaus with your latest credit details.
Do credit score ratings differ?
Credit ratings may vary from one lender/creditor to another depending upon the items (such as late payments on revolving accounts, mortgages, credit card balances,) they consider after reviewing your credit report. For instance, an auto loan provider may leave out an item that a mortgage lender would consider while providing credit score ratings.
Is Mortgage Credit score similar to the regular score?
Mortgage lenders consider the median score - the one that comes in between the maximum and minimum scores you receive from the bureaus. But often lenders may not use the median score in order to evaluate your creditworthiness because the credit report you pull from the bureau is based on the Consumer Model, where your lender may prefer to calculate the score using a different scoring system - the Mortgage Model.
The information used for both Models may be the same but the importance given to each tradeline account may vary. The Mortgage Model gives more emphasis to the tradelines that can affect your mortgage loan. Thus, your chances of getting a mortgage at a favorable interest rate may depend more upon your mortgage credit scores instead of your regular score.
The information used for both Models may be the same but the importance given to each tradeline account may vary. The Mortgage Model gives more emphasis to the tradelines that can affect your mortgage loan. Thus, your chances of getting a mortgage at a favorable interest rate may depend more upon your mortgage credit scores instead of your regular score.
Are there alternatives to FICO scores?
Apart from the FICO Scores, there are Alternative scores developed for consumers with poor credit. The Alternative scores are based on your payment history, outstanding loan balances, the type of credit accounts you have, and other factors.
As lenders pull your credit report from different bureaus, every lender will probably show different scores. Therefore, you won't get the same offers from different lenders. To avoid these discrepancies, the Vantage score has been introduced. A Vantage score ranges from 501 to 990 and is calculated the same way by each bureau thus giving you the same credit score, provided similar information is reported to each bureau
With the increase in the number of consumers who find themselves delinquent on their bills, lending standards have gotten tighter. Therefore, qualifying for a loan has become harder, especially if you don't have a good credit report or score. Especially when it comes to getting a mortgage, even those that are not supposed to be score driven require you to have a minimum 580 credit score. So, it's important to protect your credit standing and maintain a good score.
As lenders pull your credit report from different bureaus, every lender will probably show different scores. Therefore, you won't get the same offers from different lenders. To avoid these discrepancies, the Vantage score has been introduced. A Vantage score ranges from 501 to 990 and is calculated the same way by each bureau thus giving you the same credit score, provided similar information is reported to each bureau
With the increase in the number of consumers who find themselves delinquent on their bills, lending standards have gotten tighter. Therefore, qualifying for a loan has become harder, especially if you don't have a good credit report or score. Especially when it comes to getting a mortgage, even those that are not supposed to be score driven require you to have a minimum 580 credit score. So, it's important to protect your credit standing and maintain a good score.
Related Articles
- Credit Report - Determines your creditworthiness
- Vantage Score: A unified scoring model
- How credit report gets affected by credit history
- Rating your creditworthiness
- Alternative Credit Score from the PRBC Inc.
- Common Credit Repair Scams Affecting Debtors
- How do lenders rate you on credit score and other factors?
- Does a good score guarantee low interest rate?
- How can you improve your Score?
Related Discussions
jweber - the scores are calculated by what's on your credit report.
not sure what your perception is of having a good report ....
usually it's cuz ppl have high balances on credit cards...and when they pay them off their score goes up
not sure what your perception is of having a good report ....
usually it's cuz ppl have high balances on credit cards...and when they pay them off their score goes up
well the scores for experian, equifax and transunion vary should they all be the same numbers?
jweber - no. that is normal. Also, you'll probably notice that all 3 reports are probably NOT identical
will also depend on where you're pulling the scores from
will also depend on where you're pulling the scores from
there are also times in which you'll see a wide discrepancy between the three scores. some of that is due to the fact that there are creditors who report to only one of the bureaus, or by inquiries that don't go to all three bureaus but only to one or two...there are a wide variety of factors that will cause the scores to be dissimilar. i don't want to give you a stock answer, because every case is going to be quite different.
On the 29 july i scored on experian at 650 then on they 18 of august my score went down to 611 and nothing changed at all
Welcome Blaine,
You can contact Experian and check out what went wrong. They will let you know why your scores have been lowered.
You can contact Experian and check out what went wrong. They will let you know why your scores have been lowered.
hi jessica,
i run my credit report annually to ensure that it is accurate. i ran my most recent one in may with free credit report.com. my 3 scores were 782, 735 & 782. upon trying to refinance my home just this week, i was informed by my mortage company that my scores were 700,689 & 687 how can this be. i have not done anything since may that would impact my scores do drastically. i was told by the mortage comp that there company uses some other kind of module. i ran all three reports again, and i only have one blemish on my report for a medical bill $793.00 back in 2004 when i was laid off. that bill was paid, however, after it went to collections. all my other accounts either closed or paid as agreeded. my reports do show 4 credit cards that were closed by the grantor due to inactivity. i never used any of the cards. i could see how this would effect me if the accounts were closed with outstanding balances, but the cards were closed by the granter with zero balances. please tell me what to do. i am confused. i pride myself on the hard work and effort i put into to keeping my credit spotless. what can i do?
i run my credit report annually to ensure that it is accurate. i ran my most recent one in may with free credit report.com. my 3 scores were 782, 735 & 782. upon trying to refinance my home just this week, i was informed by my mortage company that my scores were 700,689 & 687 how can this be. i have not done anything since may that would impact my scores do drastically. i was told by the mortage comp that there company uses some other kind of module. i ran all three reports again, and i only have one blemish on my report for a medical bill $793.00 back in 2004 when i was laid off. that bill was paid, however, after it went to collections. all my other accounts either closed or paid as agreeded. my reports do show 4 credit cards that were closed by the grantor due to inactivity. i never used any of the cards. i could see how this would effect me if the accounts were closed with outstanding balances, but the cards were closed by the granter with zero balances. please tell me what to do. i am confused. i pride myself on the hard work and effort i put into to keeping my credit spotless. what can i do?
Hi Pebbles,
It is quite difficult for me to say why your credit scores took a hit when you haven't defaulted on any of your payments. You can contact the credit bureaus and check out if they can clarify the facts for you.
Thanks
It is quite difficult for me to say why your credit scores took a hit when you haven't defaulted on any of your payments. You can contact the credit bureaus and check out if they can clarify the facts for you.
Thanks
I have had two transunion reports done on the same day in the same town and had two different scores... why did this happen
Hi river!
Welcome to forums!
It is quite surprising that you got two different reports from the credit bureau on a particular day. It will be better if you could contact Transunion and request them for an explanation.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
It is quite surprising that you got two different reports from the credit bureau on a particular day. It will be better if you could contact Transunion and request them for an explanation.
Feel free to ask if you've further queries.
Sussane
Hubby and I have had credit problems in the past. We started with great credit, then due to job losses, reductions in hours and the like, we went through some really tough times and our credit totally tanked.
It's been a battle ever since to slowly redeem ourselves. And while we put in the work, the advice I've received here recently helped immensely.
In 2006 we had to let our mortgage loan reach the foreclosure state in order to access the funds from my husband's 401K. It was either that or lose our home entirely. At that exact moment in time our original lender was selling the loan. With the new lender we have never been late, but the last record on our credit history for the original was "foreclosure filed.". Thanks to people here I got off my duff and challenged the listing through experian. Within 5 days the nnotation was changed to simply "sold to another lender."
Also, I went after a credit card company that had my personal card and it's bad history listed on my husband's credit. With another challenge, that was wiped from his credit report.
And while I haven't yet paid to see how my husband's Vantage score stacks up in relation to the three credit bureaus, his rating with them is as follows. Equifax, 791, TransUnion 804 and Experian 815.
Can anyone advse as to how good or bad a score this would relate to in Vantage speak?
It's been a battle ever since to slowly redeem ourselves. And while we put in the work, the advice I've received here recently helped immensely.
In 2006 we had to let our mortgage loan reach the foreclosure state in order to access the funds from my husband's 401K. It was either that or lose our home entirely. At that exact moment in time our original lender was selling the loan. With the new lender we have never been late, but the last record on our credit history for the original was "foreclosure filed.". Thanks to people here I got off my duff and challenged the listing through experian. Within 5 days the nnotation was changed to simply "sold to another lender."
Also, I went after a credit card company that had my personal card and it's bad history listed on my husband's credit. With another challenge, that was wiped from his credit report.
And while I haven't yet paid to see how my husband's Vantage score stacks up in relation to the three credit bureaus, his rating with them is as follows. Equifax, 791, TransUnion 804 and Experian 815.
Can anyone advse as to how good or bad a score this would relate to in Vantage speak?
Hi anon,
It's really good to note that the advice that you received here helped you a lot in solving your financial issues.
As far as I know, under VantageScore, credit scores range from a low of 501 to a high of 990. Moreover, each 100-point interval corresponds to a letter grade, in ascending order. For example, A for a score of 501 to 600. Keeping this fact in mind, I would say that your husband's credit score is good.
Thanks
It's really good to note that the advice that you received here helped you a lot in solving your financial issues.
As far as I know, under VantageScore, credit scores range from a low of 501 to a high of 990. Moreover, each 100-point interval corresponds to a letter grade, in ascending order. For example, A for a score of 501 to 600. Keeping this fact in mind, I would say that your husband's credit score is good.
Thanks
Is the method for determining someone's FICO scores going to remain the same or are they going to change with the stricter guidelines for mortgage? Also, has the highest FICO score someone can get been raised?
Hi pepper!
Welcome to forums!
I don't think there is a method for determining someone's FICO scores to remain the same or are they going to change with the stricter guidelines for mortgage. If you have any negative items listed on the credit report, then it will have a negative affect on your scores. There are various steps which one can take in order to improve their credit score. Take a look at the given page for the same:
http://www.mortgagefit.com/credit-rating/credit-repair.html
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
I don't think there is a method for determining someone's FICO scores to remain the same or are they going to change with the stricter guidelines for mortgage. If you have any negative items listed on the credit report, then it will have a negative affect on your scores. There are various steps which one can take in order to improve their credit score. Take a look at the given page for the same:
http://www.mortgagefit.com/credit-rating/credit-repair.html
Feel free to ask if you've further queries.
Sussane
your rating or score on credit report shows your worthiness to pay off credit on time. i think they use 7'cs formula while evaluting our credit rating which include our current and past performance