What’s in a Number? Credit Scores at a Glance
Congratulations! You’re applying for that mortgage to get your dream home or that credit card with double airline miles for your round-the-world trek. You have the paperwork all filled out and ready to go, the only thing left is for the lender to check your credit score. No pressure. Right?
Wrong. Your credit score could mean the difference between approval and rejection when faced with lenders or financial institutions. Knowing your credit rating and staying informed about your revolving debt is key to financial success. Typically, credit scores range from 630 on the bad end to 800 at the excellent end, and dependent upon the lender, your credit score can be determined in a variety of ways.
How is my score calculated?
When checking your score and eligibility, most lenders use the average score of all three bureau reports (Experian, TransUnion, Equifax). But where do the bureaus get your score from? When it comes to actually calculating your score, all three bureaus base your score off of your FICO score.
Your Fair Isaac Corporation or FICO score is the number produced when your credit information is analyzed through “predictive analytics” which help lenders predict behavior, such as how likely someone is to pay their bills on time, or whether they are able to handle a larger credit line, and can also be used to forecast which accounts are most likely to end up delinquent, or which ones are most likely to be profitable.
What can hurt it?
Contrary to popular belief, regularly monitoring your credit report or receiving a credit check through the bureaus will not hurt your credit. A check to your credit score or report through the bureaus is considered a "soft" inquiry that will not harm your credit score.
However, if a lender looks at your credit score or credit report, this is a considered a "hard" inquiry and will be reflected in your credit score as it means you are seeking to increase the amount of credit you hold. Other factors that can negatively impact your credit score are delinquent accounts, late payments, and identity theft. If you find that you do have some issues on your credit- whether its suspicious activity, erroneous inquiries, or negative accounts, all our reviewed suppliers offer forms of credit repair and dispute services to help correct issues with your score, helping to pave your way to financial success and security.