Is There More Than One Credit Score?
A credit score is a tool to measure your credit worthiness. This tool is of use to the lenders. They want to make themselves sure of getting back the money they lend you. You are actually a stranger to them as far as your credit capacities and repayment abilities are concerned. Therefore, they want to be doubly sure before entering into any financial transaction with you. The main companies calculating credit scores are Equifax, Esperian, TransUnion and many others. They have a basic model of credit worthiness. This model takes shape across the dealings of a large clientele of customers. The companies look into their actions- what is their age groups, income levels, credit levels, their repayments, their total family incomes, their other expenditures, how many credit cards or loans do they have and so on. Every factor has a rate of importance, which then becomes the basic measuring tools. Generally speaking, the credit score ranges between 300 and 850. They are 'FICO scores'. This name comes down from Fair Issac and Company. There are many agencies making your credit reports. You may have different reports at different agencies as each of them goes by their individual rankings and points given. They have their separate surveys to back upon them. Therefore, the leading lending companies take the middle path of these reports. Besides the reports are constantly varying, depending upon your credit rating in the market. The main factors influencing your credit score are how regular you are in your repayments, how much money do you have to pay to different banks or financial institutions for loan repayments, etc. Another factor is if you have only recent loan accounts, you lack credit worthiness since you do not have any history of repayment of credit. Again, you may borrow from many places now and then when the load is heavier, you may not probably repay them. They also want to know about how well you keep account of your various credits and their repayments. That shows your sincerity and capacity to repay your loan installments. In the eyes of the lender if you have a high credit score, you are most worthy of credit. On the contrary, if your credit score is low, you will not figure in their favorable list of prospective clients. To get credit you should be regular in your repayments and take care not to borrow beyond your repayment capacity.