What is credit score?
Credit score is a number, representing an estimate of an individual’s creditworthiness. It is calculated by credit specialist using a special formula that helps predict and quantify one’s ability to repay a loan. The most common credit score is the FICO score. However it is not the only credit score used by credit lenders. Some other well-known include Beacon and Empirica.
FICO score ranges from 300-850. It represents a summary of your credit report and is based on one’s rating in five general categories:
Payment history (35%)
Amounts owed (30%)
Length of credit history (15%)
New credit (10%)
Types of credit used (10%)
Free Credit Report
According to the federal Fair Credit Reporting Act each of the consumer reporting companies – TransUnion, Experian, Equifax – are required to provide a free copy of one’s credit report, at his or her request, once a year. The only official site that will allow one to make a request from all three mentioned above agencies is www.annualcreditreport.com.
* The information presented in this post might have changed since the time it was published.
