Credit scores determine rate of interest, which can make car or house payments affordable or barely payable. Some employers use the scores to determine hiring, while insurance rates are definitely affected by it. Why it has such a strong influence is because it predicates the amount of risk a company takes in investing in an individual. Even though the different credit bureaus can differ in their scoring, most people only need a one time credit score to get a general idea as to where they stand. People are entitled to free credit report, but the credit score does not always come with it.
The major credit reporting agencies; Transunion, Equifax and Experian scores can vary because of the way they determine the number. The data they use is still based on pretty much the same factors. They take in consideration if a payment has been missed or how many balances have been transferred to different credit cards. A low rating happens when credit cards are maxed out or a loan is defaulted on. What can make the numbers vary from credit bureau to credit bureau is how they rate the importance of each of the factors involved. The odds of someone will pay off a loan are calculated by a set of rules and percentages that differ between them. When making a large purchase, like a house or car, monitoring the score is important. The score can fluctuate each month for many reasons, like the amount of credit a person is currently using and aging credit lines can affect the ratings. Each of the major credit bureaus offers a long term contract where monthly updates are presented. The advantage of this is there will be times when the interest rates are lower than usual. Using the one time free trail membership offered by some of the credit bureaus can get a snap shot of what the credit score is at that particular moment, giving the person a quick idea as to what their options are. With a onetime fee, Myfico provides the credit report from two of the credit bureaus and a credit score from each. The advantage of Myfico is that most of the larger banks use their ratings to determine interest rates and how risky the potential client is, providing a fairly accurate picture of the score. There may be a little variation between the three main bureaus, so it helps to get as much information as is possible. When it comes to money, knowledge of credit scores is essential to maintaining financial health. Staying ignorant does not make any problems in this area go away. Be sure to take advantage of the Fair Credit Reporting Act and get the free yearly report from the main three bureaus and make sure the information is accurate. Getting a one time credit score can show if there are any problems that need to be address. A credit report will only give basic information, but the credit score will show the true health of a person’s credit.
