A credit score is a score based on the credit report of an individual. It reflects the persons credit worthiness depending on his/her credit history. In the US, the credit score is based on the FICO (Fair Isaac Corporation) score that is calculated by using 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. An individual can obtain his/her credit score, free of cost, from all the three credit bureaus: Experian, Equifax and TransUnion once a year. All three reports can be ordered at the same time. It can also be obtained more than once under certain circumstances. All these three bureaus also offer other services apart from maintaining and furnishing credits reports. These include the PLUS score, provided by Experian, which represents the exact credit risk an individual presents. This is generally used by credit agencies and lenders while considering loan applications. Employers and landlords also use this score. A higher PLUS score indicates better credit history and hence easier loan processing as well as lower interest rates. However, these may not always be free. Other credit score related services include certain tied benefits such as free credit score with an order of three credit reports or free credit score for a limited period. Some companies offer 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 clients 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. |
