Credit Scores and Reports

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Credit Scores & Reports

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Credit Scores and Reports

The most accredited rating bureaus in the US are Equifax, Experian ands TransUnion, with each bureau setting different standards and way of calculating the credit scores. A report can be accessed for free while credit scores can be checked in exchange for a fee; it must be noted that even a credit report is not available to the individual more than 1 time per year.

Especially when an unsecured credit is being taken, lenders do make a thorough research in the individual’s financial past, and the credit scoring actually becomes the sole decisive factor for lending. There are of course cases when a lender offers a loan even if there is a bad credit rating present, but these loans generally come under very bad terms because there stands the risk of defaulting on the payments. These terms include very high interest rates, small total loan amounts, strict repayment schedule, and others.

The lower your FICO score, the more you need to prove that you are a trustworthy lender: you agree to pay higher rates, you agree to a smaller LTV (Loan-to-Value) financing; generally you are the one willing to undertake a higher degree of risk.

What FICO takes into account when setting up the values of the score, is the way a person makes use of his/her line of credit. So, when you have a card, you also have a certain limit; the more free credit you have, the better your credit score look. Next, another important factor FICO takes into account is the history of certain payments such as the rates for your car, for your mortgage and any other recorded debts you might have. Plus, if you are using credit financing for a longer number of years successfully, that will definitely add in the good sense towards your credit scoring.

The average FICO score ranges between 600 and 800; average hereby means that 50% of recorded credit histories do present these values. Anything below those values goes towards a bad credit history representation, while anything above goes towards the excellent credit rating. In order to keep your credit history in a good shape, it is very important that you handle any type of financial decision with care. This means, before you decide to contract a loan, make sure you will be able to make the repayments on time, so that in case you need other loans in the future, you will be able to contract them without problems.

Always have a look at the overall cost of any loan, as if you calculate interests and other charges, the overall cost might be too expensive you. Moreover, if you register online on the website of annualcreditreport.com you are entitled to a free credit report each year.