It is the number that tells the person capability to meet out the financial obligation particularly on the loan repayment. This credit rating is usually done by the leading institutions to examine the borrowers’ credit risk. If the score is high then it will reduce the risk of lender.
Usually the credit score is framed with 3 digit number along with R-rating where it ranges from one to nine based on the creditors past payment record. It is considered as the best rating where it allows paying the bill on time and the R9 is said to be the worst one. 3 digit numbers is considered as an indicator to find the ability of the borrower on his repayment.
Factor that influences the scores
Payment history: if you make the payment on time then you can maintain good credit score.
Credit owed: larger the debt will result in lower score rate
· Credit usage
· Acquisition of new credit
· Types of credit established
What is my credit score and what is the method used for calculation
The calculation method is more complex where it varies from one of the credit bureau to another. Most widely used system for calculation is FICO system, where it ranges from three hundred to eight hindered and fifty. It is highly risk based system. Credit bureaus have own scoring system where at some cases they combine with the FICO system. Usually the score ranger differs from one system to another where the FICSCO score ranges from the 300 to 850 and the vantage score range from 501 till 900. This explains that the person can have the different scores based on their system.
How to know the score
You can get the score by paying certain amount to the credit bureau. You can even avail this service at free of cost from some of the companies but it is not safe as you need to submit your personnel information. So it is better to avail the service from the credit bureau as they are genuine.
Purpose of credit score
It is required to examine your capability on repayment if bills. But most of the people use it for employment purpose nowadays.
What is credit check
It is an indicator used to find the financial solvency and capability. It is conducted to find the individual capability on repaying the loan amount. It also reflects on the great extent on the repayment track history of an individual for the past loans taken by him.
What is credit check is the often asked question by the people where the landlords utilize the credit check to examine the capability of their tenant before they rent their premise. It is also useful for the employer while interviewing the employee for job.
There are three different types of agencies that undergo the credit scoring they are Experian, Equifax and Trans union.
Free credit report
American government has given the rights for every consumer to get the free credit report every year. This law was framed on 2005 September. But after passing the law there was big confusion among the people regarding this law.
Most of the companies provided the free version service by singing in with them, where forget the trail version but the companies started charging them after thirty days. But after few days they found the website AnnualCreditReport. Com to find out their credit score in yearly basis.