Credit Scores Introduction – Part 1

Do you know your credit score? If you don’t, you’re not alone. In fact, as many as 60% of Americans don’t know what their credit reports say and the score that comes with them.

They’re also not aware that there are more than just one score out there for them. Did you know that there are several because so many creditors and lenders have their own systems?

They do, actually. These creditors have their own system that uses their consumers’ credit information to evaluate them and determine a score based on what is found within the credit information and the company’s own protocols.

Creditors and lenders use these credit scores they create or ones they use from the credit bureaus to help them determine whether or not they should extend credit to an applicant. Sure, other factors can play a part in their decision, but your credit score’s health plays a major role in their decision.

You’ll find that your score is based off a model from a reporting agency when your information is pulled, and that score can be changed based on any changes within your credit information that’s reported.

Scores from the Three National Bureaus


The records of your credit history and other information is kept, along with millions of others, within the three national credit bureaus, which is used to generate your credit score based on the models they’ve designed for themselves.

Each bureau has its own model and standards that will affect your score. You’ll find that the bureaus may have differing information on your credit report because some of your lenders and creditors may not send your account information to one or two of them for score generating purposes.

To find what each reporting bureau has on your information, you can gain free copies of your reports each year due to the Fair Credit Reporting Act.

While you can gain access to your reports for free, you’ll most likely face a small fee for the scores.

Factors that will typically be used by these three reporting bureaus may vary, but can include:

  • On-time versus late payments within your payment history. Late payments can have negative impacts on your credit.
  • Your credit utilization based on how much you’ve used and how much you have available. Less utilization is better than higher usage rates.
  • How many times you’ve applied for credit and created hard inquiries on your report. Only apply when you need credit, not when you want it.
  • How many installment loans you have.
  • How many car loans you have,
  • How old is your oldest account and the average age between all your credit accounts. The older, the better.
  • What is the average limit on your credit cards. The higher, the better.

Other Sources of Credit Scores

While we all have heard of the big three for the national level of credit reporting, we should know they aren’t the only ones with models of their own nor are they the only ones to develop scores based on your information to judge your credit worthiness for a particular lender or creditor.

You’ll find a list of other companies that can provide their own scores based on your information at the Consumer Financial Protection Bureau’s website.

These companies have often been utilized for potential landlords and utility companies to determine your rates.

While you can gain easier access to your credit scores from the national bureaus, you may not find all of the other agencies so accommodating. They do have to provide you with a report, free of charge, upon your denial of credit based on the FCRA if something on your report resulted in your denial.

They are required to give you have a credit report should you ask for one based on this law though you’ll most likely find they come with a fee. One thing you’ll find with these other sources is not all of them create reports for all of their applicants.


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