What is a Credit Score?
A credit score is a number system based to show a person’s credit activities in a numerical expression, to represent the credit responsibility of the person. A credit score is primarily based on the information on your credit report and typically comes from credit bureaus.
Creditors, such as banks, credit card companies, and other financial institutions use credit scores to analyze the potential risk by lending money to consumers and victims (Those who are clueless and took advantage of) and to mitigate losses due to bad debt. Creditors use credit scores to figure out who qualifies for a loan, at what interest rate, and what credit limits. Creditors also use credit scores to figure out which customers are likely to bring in the most revenue. The use identity scoring prior to authorizing access or granting credit is an implementation of a trusted system.
Credit scoring is not limited to banks. Other financial institutions, businesses, and corporations, such as mobile phone companies, insurance companies, landlords, and government departments employ these techniques. Credit scoring also has much overlap with data mining, which uses many similar techniques. These techniques combine factors but are similar or identical. A credit score is a number that summarizes the historical credit information on a credit report. The number reflects the likelihood that you will become delinquent on a loan or a credit obligation in the future.
VantageScore is a credit score developed jointly by Experian, Equifax and TransUnion. This score uses the same formula across all three credit reporting agencies, resulting in a more accurate and consistent picture of your credit history.
Credit scoring models cannot generate a score without enough credit information. If you have little or no credit history, you probably will not have a credit score available.
Score factors or score factor codes are provided with a credit score to explain how items in your credit report influenced the score. These codes can help you understand which items had the greatest impact.
Your credit score changes as your credit report changes. Therefore, it can change often since new information is added to your credit report all the time.
Credit Range – What is a good score?
There are many different credit scores with differing ranges. As a result, it is
possible for two different scores to represent the same level of lending risk. When you request a credit score from Experian, you will receive not only a score but also an explanation of what the number represents in terms of how Creditors will view your creditworthiness. If you have a good Experian credit score, you likely will have a good score with Creditors, even if the number is different.
VantageScore 3.0 has a familiar score range of 300 to 850, where the higher the score, the lower the credit risk. While each lender figure outs their own risk categories, for the U.S. population, the following general credit tiers can be identified by these score ranges:
|Credit Tiers||VantageScore 3.0|
Keep in mind that there are many different credit scores in the market and the score range will vary by model. Because there are many different credit scoring systems with different scales, a “good” credit score depends on the scoring system used by your particular lender. However, you can get a very good idea of whether you have a “good” credit score by getting a credit score and report from Experian. If you have a “good” credit score from Experian, you likely will have a “good” credit score with your lender.
One of the most common myths about credit scores is that there is only one credit score. Web sites or financial advisers who claim there is only one “real” credit score either are misinformed or are being misled. In fact, there are many different credit scores used by Creditors (according to some estimates, more than 1,000), although some scores are used more than others.
What is a credit score?
What is VantageScore®?
Why don’t I have a credit score?
What are score factors?
How often do credit scores change?
Credit Range – What is a good credit range?
What is the credit score range?
What is the score range for VantageScore®?
What is a good credit score?
Is there just one credit score?