One response to the question — “What does your credit score mean?” — is that it is a score which attempts to show how responsible a person has been in handling their credit matters. The credit score itself is a number that is based on a statistical analysis of a person’s credit report. Depending upon the credit reporting agency involved and what evaluation system they are using, this may entail paying attention to different details which each system scores differently.
But basically, it boils down to: can we trust that this person will pay his bills and will he always pay them on time. No matter jadwal bola what analysis system a credit reporting agency is using — be it the Beacon model, the Emperica model, or the Fair Isaac Risk Model — it will attempt to answer these two very basic questions for the lender who is looking at putting his capital at risk through lending it out. If you were in the business of lending capital, you would no doubt want to know this same information about the people with whom you did business, wouldn’t you.
Your credit score is a number between 350 and 850, and the higher the number the better the opportunity is for the person seeking a loan. The information contained in the credit reporting agency’s files is used to calculate your credit score. Lenders use this number in helping them decide a persons credit risk possibilities as well as giving them an idea of what interest rate to charge.
High vs. Low Credit Scores
If your credit score is on the low side, then lenders assume that you will be less likely to pay them back on time. They will either charge you a higher interest rate or possibly even turn your credit application down altogether.
If your credit score is in the high range, then you probably will be able to get the loan at better interest rates. This is true for all types of credit, including mortgages. Getting a lower interest rate on your mortgage can not only save you hundreds of dollars a year, but will also save you thousands of dollars over the lifetime of the loan. It is therefore to your advantage when pursuing a mortgage loan to have the highest credit score possible.
Sometimes you’ll hear or read about something that is called a FICO score. What is a FICO score? In the financial industry, the most well known rating score is generally referred to as a FICO score, named after the Fair Isaac Corporation which initially developed this rating system. Each credit reporting agency uses this scoring model, but each has its own name for the credit scores it uses, as was mentioned above. Equifax uses the Beacon model, TransUnion the Emperica model, and Experian the Fair Isaac model.