You go into a lender's office prepared to apply for and receive a
loan. After all, you've done your homework, you've pulled your
credit reports and you know what your credit scores are--you even
got one score from each of the three major credit bureaus:
Equifax. Experian, and TransUnion. You are shocked when your loan
is denied, or maybe you were approved, but the interest rate is
much higher than you anticipated. How can that be you say? My
credit score is good, I know I checked. Maybe it's not as good as
you think. It all depends on there you got it and what kind of
credit score it is.
Debt Consolidation And Credit The fact is there are several different credit scoring methods.
Credit scores calculated from the same credit reports can differ
substantially from credit scoring method to credit scoring
method. So how can you ever know what your credit score really
is? Well, luckily, 75% percent of lenders use FICO scores
exclusively and you can purchase FICO scores yourself--you just
have to know where to go. (www.myfico.com)
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Check Credit Rating FICO credit scoring is a numeric method of scoring your credit
worthiness developed by Fair Isaac and Company. Your credit score
is a number between 300 and 850 that tells creditors how likely
you are to pay your bills. The higher the number, the better it
looks to potential lenders and creditors.
The top row, right, describes a consumer with the highest underwriting rating ("A"), but whose status drops with her credit score (" MM"). Preferred rate. If her credit score is good or average, she gets the Preferred Rate, but if her credit score is below average, she gets the Standard rate. prime, Market rate, second from the lowest.
Improve Credit Rating The three major credit bureaus each have their own version of the
FICO score: Equifax uses the Beacon system, TransUnion uses the
Empirica system, and Experian uses the Experian/Fair Isaac
system. Despite each credit bureaus' use of their own versions,
all systems are based the original Fair Isaac FICO scoring
method, so each credit score calculated with these systems are
generally called FICO scores. However, although most lenders do
use FICO scoring, some lenders may have their own scoring
methods.
Credit Online Rating Report There is only one place where you can get your FICO score from
all three bureaus and that is at www.myfico.com. If you order
your credit score from anywhere else, again be aware that these
scores are "FAKOs" (or "fake") and can differ considerably from
your FICO credit scores.
How To Improve Your Credit Score If you apply for mortgage finance, you do not know if you will get approved for the loan and what the percentage rate will be. Both of these depend on your credit score. The better you credit score is, the higher your chances of an approval at a low rate. Credit scores are based on the information in an individual's credit report. Lenders use credit scores to evaluate the potential risk posed by lending money to consumers
Credit Score Rating Scale Adding to the confusion is the credit bureaus themselves.
Recently, Experian revealed that the national average credit
score of its consumers is 678. This is very misleading to the
average consumer. When you buy your credit report and score
directly from Experians website, you are getting what they call
the "PLUS Score," which is NOT a FICO score, and is NOT used by
lenders anywhere. (Equifax is the exception--you can buy your
FICO score directly from them at their website; however, the only
place to get all three scores together is at www.myfico.com.) The
678 PLUS Score reported by Experian is actually the average of
consumers' PLUS Scores, not their FICO Scores.
Because each bureau can and does receive information from different banks and creditors, your credit score (also referred to as "FICO score") can differ from credit bureau to credit bureau. While credit scores themselves range from 350 to 850, a FICO score of 700 from Experian is generally considered the equivalent of a 700 FICO score from Equifax or TransUnion. Regardless of which bureau supplies your credit report rating, the higher your FICO score, the better your chances are of securing a loan, with a favorable interest rate and ultimately having a stronger more solid credit history.
Bad Card Credit Credit People Clearly, the PLUS Score (and all Non-FICO scores) are useless.
Not only that, but such hype misleads consumers into purchasing
their PLUS Score thinking that they are getting the same credit
score that their lender will use. Non-FICO scores are worthless
not matter what the credit bureaus or any website selling
non-FICO scores claim. Even a few points difference in your
credit score can mean confronting the reality of the loss of
thousands of dollars out of your pocket--a loss that you probably
didn't plan for. The next time you want the most accurate credit
score available, do yourself a favor and get the industry
standard: the FICO credit score.
Free Credit Rating Report
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