Credit score is a sum used by lenders as an indicator of how likely you are to repay your loans. Your credit score is generated by a mathematical formula utilizing the data from your TransUnion, Equifax or Experian credit reports. Lenders have been using credit scores as part of the lending decision for over than 20 years.
What factors influence my credit score?
The recent economic downturn has everyone finger pointing to establish blame in hopes of correcting the circumstances that created this spiraling situation.One of the most widely accepted culprits named have been the far too lenient standards for lending on real estate loans, which has led to millions of foreclosures and short sales across the country.The Dodd-Frank Wall Street Reform and Consumer Protection Act, dubbed the Dodd-Frank Act for abbreviations sake, was signed into law in 2010 to among many other things, begin the process of cleaning up the lending industry.
Since the enacting of the Dodd-Frank Act under a provision known as the “Risk-Based Pricing Rule”, consumers have been empowered with the ability to access their credit information without fee or penalty if declined or extended less than favorable terms.As of July 21st, 2011 consumers who were never declined for a loan or those who have received even the most favorable terms have the right to request their own credit reports as well.Essentially any consumer applying for credit under any terms has the right to see their credit reports and without a fee.
As they say, ‘Knowledge is power.’ Many times people either act on false information or fail to act because they didn’t know what could be done to their benefit. This is the case in many areas of life, but on the top of that list is money. And in the money category, you will find lots of misinformation about Credit.
There is so much to talk about on the topic of credit myths that an entire book could be dedicated to it.
Most of us want a good credit report to obtain automobile financing, credit cards, and to purchase a home. But, beyond these consumer loans, your credit report can cost you in everyday living expenses. What you don’t know about your credit could be costing you money. Having a credit card means that you can order tickets, rent a car, and reserve hotel rooms. Besides these conveniences, your credit report can mean that you must pay higher deposits and fees for everyday services.
Your credit score is based on multiple variables that are dependent on your credit and amount of money loaned out to you.
Like - historical payments, time you have had an account, types of accounts and age of account
Your credit, or more appropriately addressed as the ability for you to pay back the money that has been loaned to you, whether it be through a credit card, mortgage, home equity loan, car, RV, boat, motorcycle, rental apartment or town home, or just about anything that involves you paying back money trustingly for the items you have purchased or pay for on a monthly basis.
When your credit score is accumulated, each item is passed through a system where points are either awarded or deducted based on the status of the terms.
The terms credit report and credit score seem synonymous, but really there is a difference between the two that as a consumer is important to know. To sum it up you can have a credit report without a credit score but not the other way around. If you’ve pulled your yearly free credit report at annualcreditreport.com (which you really should!) you’ll notice it’s missing a credit score. Let me break it down:
This concept is hard to believe I know. As if posting a picture you didn’t intend your co-workers to see or accidentally updating something to completely offend half of your friends list wasn’t bad enough, soon your Facebook and Twitter may diminish your ability to obtain a loan and blemish your credit report.
Your Credit report score has been affecting your Credit History for years and you may not even know you have one or what it is. A credit score is a numerical number that is determined from a mathematical formula based on the information found in your Credit bureau report.
The formula is complex and looks at many things in your credit report to determine your score, like, how old your credit is, how you have paid your credit in the past and what standings your debts are currently at, how many debts you have, the number and age of inquires, how you utilize your credit, as well as what your balances are in relation to your credit limits.
When you apply for a Credit Card or loan, the financial lender will automatically examine your Credit report. It will then formulate a credit score for you and either accept or decline your loan or credit card application based on that score. So what is a credit report and how do you find out what yours says?
Whenever you pay your bills or repay loans, the Credit bureau is essentially watching you. The credit you have on hand, the monthly debts you’ve accrued, and other miscellaneous financial information, is all collected by Credit Bureaus. Even your record for paying off your Sears credit card is on file! The bureaus sell this information to financial institutions, which use it to determine if you are a good candidate for a credit card or loan.
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