Credit Scores Free

Your credit score will tell lenders how likely you are going to pay your bills. As such, the credit score becomes their basis whether they should approve your credit application or not. That is why it is extremely important that you keep tabs of your credit score scales. The better your score, the higher chance you have of getting approved for a loan and the better interest rates the lender is willing to offer. Whereas, the lower your score, the more likely you wont get approved for a loan.

How are Credit Score Scales Calculated?

Credit score scales are calculated through a complex mathematical algorithm using factors generally involved in making credit decisions. These factors include payment history, credit history, credit available, existing or current debts, bankruptcies if any, among others.

Who Evaluates Your Credit?

The top three credit bureaus that report credit score scales to banks and other lending institutions are Experian, Equifax, and Trans Union. All three are private companies that assign value to your credit rating based on information found in your credit report. The factors used to calculate the scores are basically the same. However, since these companies use their own unique system of credit score scales, your credit scores and reports may vary from company to company.

Moreover, some lenders do not rely solely on the credit score scales released by these three credit bureaus. They may have their own system of analyzing future credit performance that affect how they are going to approve your credit application with them.

The First Credit Score Scale

Regardless, the most common credit score scale system used (and the first ever) by credit reporting agencies is the FICO score, developed by Fair Isaac Corp. The FICO score has a credit score scale of 300-850 with 720 and above considered as good scores meaning, credit worthy. However, this does not mean that those who are scoring below 720 have no chance of getting credit, since lenders may still approve credits even if the applicants have low credit scores.

Why Credit Score Scales are Important

Credit score scales make it easier for lenders to make fast decisions concerning loan approvals. Since the scores represent the most precise information they need, they can make accurate decisions based on these scores much faster.

Faster loan approval process benefits the consumer. Because lenders will spend less time mulling over one application, they can accept more applications for credits and approve more people. Of course, your chances of getting approved for a loan or a mortgage are dependent on whether you have a good credit score scale. Many lenders will charge higher interest rates if your credit score is lower than average.

Check your Free Credit Report and Be Wary of your Score

Want to know your financial creditworthiness?

Have a credit check and determine your personal credit score.

Credit check is usually done to verify whether you are eligible for a loan or on any other forms of credit based on your past credit performances. This will reveal your past as well as your previous credit transactions with different lenders and how you deal with it. Thus, a credit check is the reflection of your past credit performance. It works like a report card, which reveals whether you have “passed” or “failed” in a particular subject.

Credit checks are done by lending institutions such as credit card companies and banks on individuals who wish to apply for a loan or any form of credit. In addition, credit checks could also be done by a homeowner whether an individual would be a good tenant or not, as reflected by his or her past credit performance. Insurance firms also run credit checks on individuals who wish to avail of their insurance policies.

You can obtain your credit report containing credit-related information from any of the three major credit-reporting agencies. Furthermore, you can obtain your personal credit reports for free as stated in the FCRA or the Fair Credit Reporting Act. Under this Act, every individual is entitled to receive a free credit report from any of the three major credit-reporting companies in the United States once a year – Experian, Equifax, and Trans Union. Your free credit report contain your personal information (such as your name and address), how you paid your past and previous bills, and any delinquencies you have committed such as late payments as well as if you have filed for bankruptcy.

To obtain your free credit report, you need to fill up the required form through a centralized credit report website on any of the three major credit bureaus in the United States. You will be required to provide some basic information, which includes your name, permanent address, your social security number, and your birth date. Your credit report is important in securing yourself against any attempts of identity theft such as credit cards misuse and other forms of fraud. In addition, you must update your credit report regularly as lending institutions would be using such reports to determine if you are worthy enough to be awarded with the loan you have applied for.

After you received your free credit report, you should read each section carefully. All aspects must be included in computing your credit score. So make sure you have paid attention to all of them. Check your report for any discrepancies and make sure that you have not missed any payments at all. Your credit report also comes with the list of individuals or business entities that you have requested credit information from. You may also check to see if such names or entities are familiar with you.

Your free credit report would be used in running a credit check to you when applying for a loan or any other forms of credit. Thus, make sure that it is free of discrepancies or erroneous entries. Keep in mind that this report will reflect your credit performance – ensure that you do not stumble anywhere so that your loan application would always be a success.