Understanding Credit Scores
TweetHow to Understand Credit Scores.
Understanding credit scores is critical for all consumers in today's marketplace. Credit scores have a huge impact as to whether you will be able to qualify for loans and at what rate. Credit reports and scores are often considered by landlords, employers, and insurance providers. It is wise to check your credit scores often (about 3 times a year) to make sure they are accurate. If your credit score is being damaged by mistakes or other information that you do not agree with, you are responsible for fixing it. The bureaus and those who furnish information to the bureaus could care less about your credit score.
The three major bureaus that keep your information on file and used by most lending institutions are Equifax, TransUnion, and Experian. A formula developed by Fair Issac and Company takes the information contained on your credit report and statistically assigns a number. Because the bureaus receive different information, you will have 3 different credit scores. Most of the time, lenders will look at the median score. However, there are some institutions that are partial to one bureau over the others and will only use that score; which could be the lowest of the three sabotaging your eligibility for a good loan.
Your credit score is an indication of how likely you are to pay back a loan. The higher your score, the less credit risk you are to lenders. Lenders will give the best rates to applicants with a score above 700. Dropping below 700 will start to raise the rates. Understanding the correlation between credit scores and interest rates is crucial to your financial well being. A score of 600 will cost you thousands of dollars in interest in the long run.
There are many strategies to raising your credit score. One of these includes disputing errors or other information that you don't agree with on your credit report. The experts at Legacy Legal Services specialize in cleaning up credit reports and raising credit scores. If you are having a hard time understanding your credit score, consider hiring a professional to assist you. Speak with one of Legacy Legal's knowledgeable representatives today. We offer a free consultation that answers many questions and provides understanding of credit scores and other credit issues. We can start you on the road to healthy credit today.
