You know about credit, everyone does. We all know that it is a 3 digit number assigned to you that pretty much controls a lot of things in your life. Lately, you find yourself wanting to get bigger things in life and hit those financial milestones. Like buying a house, a car, and taking out some loans too. But before you do all of that you ask yourself “what is a credit score?” So we are here to break down what actually a credit score is.
Essentially a credit score is a measurement of your credit history. It’s based on how likely you are to repay any debt that you’ve taken. A good analogy to understand what a credit score is to simply think about it as a grade like the ones you get in school. This grade, the higher it is the better and the lower it is, well fill in the rest. This tells lenders how well you manage your credit such as loans, lines of credit and any other obligation you’ve had like a house or a car.
Having a good credit score is extremely important. Your credit score affects your ability to borrow money from lenders and also determines how much you would have to be paid back. Credit scores are not strictly based on lending money, it’s also based on your eligibility for a car loan, phone lines, and simple services. Keeping up with your payments and maintaining a good credit score is a must. If you find yourself in a position where you have a bad credit score, it can make it difficult for you to find a place to live and even get a job.
Your credit score is not just a number pulled out from thin air like we said there are many factors that come into play to determine it. To get your credit score, there are three main credit bureaus. Equifax, TransUnion, and Experian. These credit bureaus create your credit report using credit scoring models such as VantageScore and FICO. They are then presented with a score typically in the ranges of 300-850. There are slight variations up your credit score when you use the three main credit bureaus, this credit score companies can use their own models also to come up with the final number for your credit score.
Your credit score is calculated using different factors. You can read more about what impacts your credit score here.
With all the different factors that come together to make your credit score oh, it isn’t uncommon to have a different score calculator with the different bureaus. So there are a few factors that come into play on why you would have a different score. For example, if one of the lenders you are going to for a loan for anything related to credit oh, it could be likely that they don’t report to all three of the credit bureaus can only report to one or two. So when you go ahead for a credit report, there may be a slight variation with your credit scores provided simply because one of the reports may have more data than the other. Likewise, the scoring model can be different depending on the lenders. So for example, if you go ahead and choose an auto loan with one lender, and a mortgage with another, it could be likely that they don’t use the same scoring model which in turn show a discrepancy on your credit report.
Let’s take a quick look at why your credit scores may be different across some credit reports.
There are two main types of credit scores. These are FICO or VantageScore. Both of these are used by many lenders, both having ranges of 300-850. So let’s take a look at what ranges these companies consider to be poor, to be good, or to be exceptional.
That was a little break down to your question of what is a credit score. Be giving you all the necessary information you need to know how about credit scores in general. I have a question regarding your credit score or you’re looking to have your credit score repair it definitely clicks here to call us.
Regardless of anything credit scores are incredibly important. They help you meet those financial milestones in life, so it’s always important to make sure that you know what affects your credit score and how it’s made. and like we said before don’t worry if your credit scores differ on your credit reports, just make sure you have those inaccuracies removed or adjusted so you’ll have a higher credit score to benefit you in the long run.
Here’s a free consultation to some credit repair services near you just click the number to call.