What Is A Credit Score?
A credit score is a
three-digit number generated directly from a consumer's credit report. It is
calculated by applying numerical values to an array of pre-determined
variables, such as repayment history, bankruptcy and foreclosure. A credit
score is less subjective in determining creditworthiness than a credit
report, but in general, lenders will base their decision on information
taken from both credit formats. Visit
Privacy Matterssm to request your free credit report and score from all three credit bureaus!
A credit score affects
the consumer's chances of receiving bank loans, credit cards and other lines
of credit. A credit score greatly influences how much a loan costs by
impacting interest rates. Besides a credit score, other factors used in
determining rates include equity, inflation and the type of property the
loan is being used to purchase.
Typically, you will find
that lenders and merchants use credit scores in order to make prompt
decisions on loan offers, interest rates and minimum payments. Landlords,
utility companies, employers and even insurance companies may use credit
scores as a legitimate way to gage credibility. A high score is often used
to assess a person's trustworthiness, perhaps by equating good credit with
personal integrity.
Many consumers look to
their credit scores in order to determine how to manage their finances. A
higher score may indicate appropriate times to apply for new lines of
credit, while a lower score may suggest the need for some basic
improvements. Like the credit report, a score is flexible, changing over
time with every update to a person's credit history. Reviewing your credit
score regularly may help you improve your rating, and therefore increase
your chances of receiving the loan awards you deserve.
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