The 6 Principles Of Credit Scores You Ought To Know - Make Money Online

Header AD

The 6 Principles Of Credit Scores You Ought To Know

For most credit card holders, credit scores sound like a complicated aspect but this should not be the case. There are essential tenets which can help you comprehend the concept of credit scores better. Take a read.

       I.            Credit scoring models
The three bureaus give different credit scores because of their diversity in the credit scoring models. The most common scoring model is the FICO score but what most people don’t know is that within this model, there are other 49 models in FICO. Other models include ScorePower, Vantage Score, TransRisk Score, among others. Every model has its own formula and scoring range that aggregates the credit scores. And that is why credit scores differ from one bureau to the next.

     II.            Free credit reports
Every year, you have the right to 3 credit reports from the government. You simply log on to the official website and request a free credit report. You can also benefit from similar services through free monitoring agencies if you are going through the process of credit repair.



  III.            The 5 credit score factors
There are 5 major determinants of your credit score according to FICO: credit utilization, payment history, credit inquiries, the age of the credit account, and the mix of credit. These factors affect your credit score at different percentages.

  IV.            Free credit scores
The law doesn’t permit provision of free credit scores from the credit bureaus but certain credit repair companies give their clients free scores. These are however not the usual FICO scores and they differ significantly.

    V.            Credit report
This is the overall debt repayment history. If you have a mortgage loan, student loan, auto loan, or any personal loan, tit report includes personal information (address, phone number, date of birth, and physical adhey will reflect on your credit report. Other information in the creddress), bankruptcy, credit cards, third party collection accounts, inquiries, judgments, and tax liens. 

  VI.            Credit inquiries
You must know that checking your credit has no adverse effects on your credit scores. Two inquiries that appear on your credit report include soft and hard inquiries. If you apply for credit say auto loan or mortgage, you will be creating a hard inquiry and this is going to reduce your scores. When you are checking your credit report from a credit website, you will incur a soft inquiry and this will have no effect on your credit scores; so you can do it as many times as you wish.

If you didn’t know, credit score is basically the aggregated data of your credit report which is calculated in a mathematical formula that represents the results of your report in three digits.
The 6 Principles Of Credit Scores You Ought To Know The 6 Principles Of Credit Scores You Ought To Know Reviewed by Parvesh Bravo on 8:35 PM Rating: 5