Learn All About Credit Scores
A credit score in the United States is a number representing the creditworthiness of a person, the likelihood that person will pay his or her debts. Lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers. Widespread use of credit scores has made credit more widely available and less expensive for many consumers. Your score can affect whether or not you are approved as well as what interest rate you are charged. A good credit score is generally considered to be 700 or higher, but still this can't be considered as a set standard. The problem is there are many scoring models used to determine your credit score. The variety of models means your score can vary several points, depending on whose model is used and what type of company (Department store? Car dealership? Bank?) is asking for it.
Credit Scoring Models
Here are the main credit scoring models:
- FICO score
- CE Score
- Other credit scores
The FICO model is used by the vast majority of banks and credit grantors, and is based on consumer credit files of the three national credit bureaus: Experian, Equifax, and TransUnion. Because a consumer's credit file may contain different information at each of the bureaus, FICO scores can vary depending on which bureau provides the information to FICO to generate the score.
To learn more about FICO Scores, click the links on left.