| By Alison
Cole Credit scores are scores that show a person’s financial creditworthiness.
The credit score is used to verify whether the person qualifies for a loan, or
any other credit, based on whether he has repaid his previous loans satisfactorily.
In other words, a credit report is a reflection of the past credit history of
an individual.
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Credit score is used by banks and other lending companies to estimate
how risky the borrower is. It helps them to determine how much loan can be given
and at what rate of interest. |
Credit scores are also sought by employers and landlords
for determining the eligibility of the applicant.
In the US, the credit
score is based on the FICO (Fair Isaac Corporation) score that is calculated by
using certain mathematical and statistical techniques. There are also other versions
of calculating credit scores such as Beacon and Empirica. A FICO score
is based on various factors including: punctuality of payment in the past, capacity
used (ratio of current revolving debt to total available revolving credit), length
of credit history, types of credits used and recent credits obtained. FICO
scores range from 300-850 wherein a score below 600 is considered “bad”, while
a score above 720 is considered “good”. Every US citizen can obtain a credit report
from a reporting agency as per the FACT Act (Fair and Accurate Credit Transactions
Act). Every person can get his/her credit report from each one of the credit
bureaus: Experian, Equifax and TransUnion, once a year. All three reports can
be ordered at the same time. A free report can also be obtained more than
once within the same year in certain situations like if a person is on welfare,
or if the report was inaccurate because of fraud, if the person is unemployed
and is looking for a job. If a company takes adverse action against the applicant
such as denying application for credit, insurance, or employment, one can ask
for a report within 60 days of receiving notice of the action. There are
also other companies that provide free credit scores and reports using their own
tools and resources. They also provide other services such as free alerts about
changes in the credit report, and advice about loan lenders and credit card companies
that would provide credit suitable to the client’s credit score. However, the
free offers are generally used to just attract people towards their other services.
The free services are only for limited periods and usually require registration
to their other paid services for accessing free credit scores. Free
Credit Score provides detailed information on Free Credit Score, Free Online
Credit Scores, Free Credit Report And Score, Free Credit Score Services and more.
Free Credit Score is affiliated with Free
Government Credit Checks. Article Source: http://EzineArticles.com/?expert=Alison_Cole
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