Credit Score: What it is?

Once you are out of your college, you start your career with a full time job in a big company and a great salary. To celebrate this you go out with your friends and enjoy. Then you test-drive your favorite car in your favorite color. This will be your first new car you ever owned. You will be so excited to buy this one but suddenly the dealer tells you that you cannot buy this car because you have bad credit score. You didn’t maintain your credit score. This can happen to you as well.

But don’t worry, I’ll tell what to do and how to maintain your credit score. The credit report is provided by three major credit reporting agencies-Equifax, Experian and TransUnion. A lender may request reports from one or all the three of them. The lender decides to lend you money only after analyzing your credit reports. The credit report is actually a factual record of the payment history and a critical indicator of your creditworthiness.

If you are not clear about your financial history it may come back to haunt you any time. your credit report can show all your credit history right from your credit cards ran up to their limits to your delayed or irregular payment of the loan installments. All these activities reflect your creditworthiness and affect your credit score badly.

Different credit reporting agency has given different name to the credit score issued by them. Equifax call it Beacon Score, Experian call it a FICO score or Fair Issac and TransUnion call it Empirica. The credit score is calculated using a mathematical formula that uses your credit history. The scoring system does not vary due to factors like age, race, employment, residence, marital status, religion, sex, national origin, or income. Credit scores generally fluctuate, so it depends on you to take improve or maintain a good credit score.


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