What Is A Credit Score?
What is a credit score. Through complex mathematical formulas, a credit score is a three digit number that determines financial risk. A score can range anywhere from around 300 to 900, depending on the bureau, bureau version and scoring models used (we’ll go more into that later). A higher number in that range signifies better credit history and less risk to a lender, while a lower number reflects poorer credit history and more risk to a lender.
Rest assured, your three digit score is not the only factor a bank or lender considers, but it is perhaps one of the most significant factors.
A scoring model is built by analyzing how millions of consumers repay their debts. Each of the major bureaus–Equifax, Experian and TransUnion–use a different scoring model–Beacon, FICO, and Empirica–that weigh various factors of a credit history differently. You have, at minimum, three different scores. However (and here’s where it can get confusing), there could be countless
versions of each bureau’s score based on the particular algorithm used. In any case, it’s important to have more positive items on your credit history than negative to ensure that whichever bureau or score is pulled by particular lender, you’re getting the best possible loan terms and interest rate.
So, what factors are considered by the scoring models? A scoring model will consider the length of your credit history, the types of credit accounts reporting, how much you owe to other creditors and how many new accounts have recently been opened. Typically, a longer history with fewer or no late payments, a healthy variety of credit accounts, a low (but not necessarily absent) balance on open accounts and fewer inquiries or recently opened accounts result in a higher credit score. We discuss each of these factors more in depth over on our blog . To get started with our credit restoration process. call us today at (800) 811-9429 or contact us online .Source: aaacreditrestore.com