Your credit score is a number assigned by one of the three major consumer credit-reporting agencies - Equifax, Experion, and TransUnion. It is also called a FICO score. This is short for the Fair Isaac Company, which wrote the software that calculates the score. (Recently, some large financial institutions have hired statistics specialists to design their own credit scoring software because they believe the national scores are not accurate for their regional differences, and they would like something more fine-tuned to evaluate loan requests.)
Just because the major credit reporting agencies all use the same software does not mean all three will have the same score for you. Most of your credit history and other information will be the same with all three of them; however, some will have more information than others. Those differences, and slight variations in their formulas, can make a difference in your score. That is why, when obtaining your credit score, you have to get it from each credit-reporting agency.
Not all of your credit history will appear on your credit report. As a result, many things might be good or bad about your credit history, but not affect your credit score. As a general matter, the following will appear on your credit report:
Payments to utility companies, landlords, health care providers, or for business loans will normally not appear.
By law, all three credit reporting agencies are required to give you one free credit report per year. In order to comply with the law, they set up a central phone number and website as a starting point. They are allowed to charge you for the actual credit score, but you can go to the same place as the credit reports to obtain it. You may or may not get your free credit report. An excellent source is myfico.com, but it offers only the Equifax score, not the other two.
There is usually someone out there willing to loan money to almost anyone. Generally speaking, the lower your credit score, the higher you can expect your interest rate to be. You may also have to pay a larger down payment. Also, you will have fewer choices of lenders and will have to work harder to find one willing to make a loan to you. Substantial liquid assets (cash, stocks, and bonds) will almost always help a lender overlook your poor credit score. In addition, high-income individuals such as orthopedic surgeons and trial lawyers can usually explain away a poor credit score to the satisfaction of a lender. For most of us, though, we need to concentrate on improving that score if we want to borrow money.
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