What is a Credit Score
by: Michael Creditfirm.
A credit score is a number which is based on a statistical analysis of a person’s credit file, to represent the creditworthiness of that person. A credit score is primarily based on credit report information typically sourced from the credit bureaus. A credit score is primarily based on credit report information, typically from one of the three major credit bureaus: Experian, TransUnion, and Equifax.
Different Types of Credit Scores
*FICO Fair Isaac Co.
*FICO has more than one formula for determining a credit score.
*The 3 most common FICO Algorithms are:
- FairIsaac 2.0 (used by Experian)
- Beacon 5.0 (used by Equifax)
- FICO RiskScoreClassic 04 (used by TransUnion).
Don’t let the different credit scores confuse you, they all follow the same basic algorithm in determining your creditworthiness.
By improving the factors which are used to calculate the credit score, Credit Firm helps increase your credit score.
Why do you need a good credit score
Lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt.
Lenders use credit scores to determine who qualifies for a loan, at what interest rate, and what credit limits.
Credit scoring is not limited to banks. Other organizations, such as mobile phone companies, insurance companies, landlords, and government departments employ the same techniques.
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