What is a credit score?

     Your credit score is based on your bill paying history and debt profile. A three digit number comprised of statistical information that lending institutions use to determine what your credit behaviors are and whether you will pay on time.

     Understanding your credit profile information is the key to understading your credit score.

     Your interest rates on borrowed money is a reflection of your credit score.

     The more you know about your credit score, the more you can negotiate the best interest rates with lenders.

     Consumer credit reports do not include a credit score.

     Consumer credit reporting agencies charge a fee for credit scores.

Credit scores are more often being used to determine purposes other than the likeliness of consumers defaulting on loans or making late payments. Some insurance companies use a low credit score as an indication on whether and individual is more likely to make a claim against their policy. Some companies believe there is a relationship between multiple insurance claims and lower credit scores. Although there is legislation to prevent this type of practice, it does exist. Making sure your credit score is accurate will make a huge difference in your interest rates as well as the availability and the cost of your insurance premiums.

Credit Scores from Lenders

You may be eligible to recieve a credit score for free when applying for a home loan if your lender uses credit scores. If you are ineligible there are three major consumer credit reporting agencies from which you may purchase your credit score.

               Equifax
               800 685-1111
               http://www.equifax.com
               P.O. Box 740241
               Atlanta, Ga.
               30374-0241

               Experian
               888 322-5583
               http://www.experian.com
               P.O. Box 2002
               Allen, Texas 75013

               Transunion
               800 888-4213
               http://www.transunion.com
               P.O. Box 1000
               Chester, Pa. 19022

While consumer credit reporting agencies are required to provide free annual consumer credit reports, they are not required to provide a credit score. It is recommended that when you request your free annual credit report, you go ahead and pay for your credit score. A consumer credit reporting agency must, upon request, provide information on four key factors negatively affecting your credit score. Purchase a credit score alone, and not part of a monitoring package.

It is recommended buying a credit score from all three reporting agencies only if there are substantial differences in the information provided on all three of your free annual credit reports. It is important that all three credit reports be consistant.

Credit scores are calculated using models of types of debts and comparisons of repayment history and thousands of other comsumers.

Important factors of your credit score include how much of your available credit you are using and whether or not there are existing credit limits on your accounts. Missing credit limits may reflect badly on your report simply because it may appear as if you are using every bit of your available credit. Make sure your credit card company reports all your limits.

A higher score is best, in general a score can range from 300 to 850, although most scores range from 600 to 700. The boundary between a standard loan and a subprime loan is 620. A higher score means it is easier to secure credit with better terms and lower cost.