What is credit

Your credit score is a numerical evaluation of your honesty, integrity, and ability to pay back money you borrow. The more faith people and businesses have that you will pay them back on time and within terms, the more likely they are to loan money to you, and at a lower interest rate (because they will have no collection problems or risk of not getting their money back).

What are the three credit bureaus? – Transunion, Equifax, Experian.

FICO scores from 300 to 850 and Vantage Plus scores from 501 to 990.

Here is the breakdown for both systems.

Vantage Plus system scores from 501-990.

A-901-990
B-801-900
C-701-800
D-601-700
F-501-600

FICO system scores from 300-850.

Elite-740-& up
Prime-700-739
Preferred-660-699
Standard-625-659
Sub-prime-624-& under

And just so you will know Experian only uses Vantage, Equifax only uses FICO and Transunion uses both depending of which type of credit report is requested of which there are 3. The standard that people get from the Internet, the auto enhanced which only car dealers and lenders see and the factual which only mortgage people see. The last two are not available to the general public.

To have the very best score and profile people need 3-4 credit card accounts (revolving) with balances below 30% of their credit limits and 2 cars, homes, boats, motorcycles, computers, furniture or personal accounts (installment) all with good long payment history’s.

Add to this that unless you get your scores either direct from either Equifax or myfico.com you’re getting what’s called a FAKO score which makes it even worse because they all have their own system to calculate scores.

Credit scores are 90% based on the last 24-months of activity, and they can change daily depending on the information submitted by your creditors.

Fico Score; A FICO score is the main type of credit score used in the US. You actually have three FICO scores, one from each of the three major reporting agencies: Equifax, Experian, and TransUnion. No one knows how a FICO score is calculated, exactly, because the Fair Issac Corporation (which owns the FICO score formula and leases it to the credit reporting agencies) won’t release the formula to the public. But we do know that they use five categories to determine your score. Here they are, in order of importance:

History of on-time payments
Debt-to-credit ratio on revolving lines of credit (such as credit cards) (lower is better)
Length of credit history
Types of credit used
Recent credit inquires (in other words, have you applied for credit recently)

Other factors may influence your FICO score, usually negatively. Things like bankruptcy, tax liens, etc.

You’ll have to order your FICO score from one of the agencies to get ahold of it. It will be slightly different for each of the three companies, and in fact, you can’t even get your FICO score from Experian. As of February, they stopped selling FICO scores to people, they’ll only release your FICO score to a bank, lender, employer… basically anyone, but you who is authorized to look it up.

You can actually get your TransUnion FICO score for free from http://www.creditkarma.com – it’s a site with ads, which is why you can get it for free. Or you can use this FICO score estimator, although it’s not 100% accurate, of course: http://www.bankrate.com/brm/fico/calc.as