If a person knew more about their own credit rating they could save money and be in much greater shape for their own sake. Most people do not even know the basic facts of credit, how it works, or how to deal with situations. Consumers still are unaware of the most simple and basic facts and what they mean, credit wise, said Stephen Brobeck. Brobeck is Executive director of Consumer Federation of America.
A recent poll shows only twenty seven percent of consumers know that scores on their credit rating is a measure of credit risk. Your score, called a credit score or FICO, is a figure that is based on how likely a company will believe that you will pay back a given amount of money, or a loan, on time. The higher the credit score that a person has, the less risk they are thought to have. There are three credit bureaus, TransUnion, Equifax, and Experian. Credit Bureaus take any information that they get from companies and creditors, and put it all together into a credit score. The information is from companies that have given you credit in the past.
Items such as what kind of credit, the payment history you have had, and the length of your credit history, and the amounts of credit owed. The credit bureaus are notorious about detail, many times a credit report has errors in it but they make efforts to correct errors when they are presented to them. Credit scores range from a perfect 850 to a low of 300. The best method of assessing a persons credit risk is by using their credit report score.
Lenders assess how risky that you are as a possible borrower. The higher your credit score, the less of a risk you pose to a bank or creditor and the increased chance you will be given credit at a good rate. Consumers with a rate of 760 are typically given the best rates on credit loans, those with scores of 700 or better have a little bit less but still are considered good risks.
Consumers that have a score of 600 or below are considered at much greater risk and are charged a higher rate accordingly. If you have a really poor score, you might not be able to get a loan at all. Late payments, missed payments, or not paying on a loan damages your credit rating, but re establishing good credit raises your credit score. Director of Privacy Rights, Beth Givens says: Ideally a person wants to have a score above 620, that is a drawing line for people who are trying to get credit. Privacy Rights is a Clearinghouse for credit and privacy