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3 Different Credit Scores

Major credit report agencies include the big three, Equifax, Experian and TransUnion. These provide customers with the decisive score of creditworthiness. Otherwise called the FICO score, the system of determining this value was developed by Fair Isaac Co. It uses a system of algorithms for determining a credit score index. This is the single value used to review the borrower’s loan application and the precursor to how your credit files should be handled. The lender gets a quick projection of the risk that they are liable to take up if they close your loan deal. The underwriting process is therefore made easier opening you up to an opportunity for mortgage or alternative loans.


Scores extend from 300 to 900 with 13% of the US population falling above the 800 mark. The worst mark is said to be 620 but most of the population falls between the 600 and 700 values. The national average credit score is placed at 680 with 15% of the population falling below the 550 value thus accounting for the deprecation. Payment history makes up most of the credit score with outstanding debt taking up most of the remaining part. Characteristics used for the determination of these scores vary in significance.

Failure to repay back your loans is for instance viewed carefully since this portrays a great probability of future delinquency. It also makes up major part of your credit score and each event of this nature knocks off a large chunk of your credit scores. How you use your credit also matters, reaching close to your auto loan for example marks out your loan for possible rejection by the lender. Any such applications are viewed as attempts to raise your credit line without necessarily having other alternatives. Holding your credit file for a long period may also indicate that you make regular payments and are likely to pose less risk to the lender’s interests.


Obtained from different bureaus, the credit scores are unlikely to be similar. The credit report agencies use different criteria in working out individual scores and it is therefore hard to compare them against each other. However, the basic financial queries are made of each consumer’s file. The number of times you initiate credit request for example should not exceed a certain limit as this indicates your tendency towards short term debt instruments. One should also consider a mix of credit lines when hunting around for loans. This will eventually give you access to free money thus opening you up to any other credit sources you may require in future.


You can always request for your credit score in order to check what needs correction on the report. It also helps you make improvements on your balance sheet. A frequent check on your score is bound to save you the sweat when searching for a mortgage. At least 3 to 6 months improvement gives you a chance to score the best deal with your lender. The federal law requires the credit report agencies to give you one free credit report once every 12 months.

Tags: check, credit, law, loan, money, mortgage, risk

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