Major Credit Bureau Scoring

In the financial world, a credit rating is actually a number through which lenders can decide whether or not to give a loan or line of credit to an individual. An individual’s credit rating is dependant on a number of factors; of which some are controllable, and others, not.

Major Credit Bureau Credit Scores

Most lenders approach the three main agencies that constitute the Major Credit Bureau to get a credit score. These three agencies are TransUnion, Equifax and Experian. Most of the lenders prefer to get two or more reports as the details each agency may be different from the other. It has never been decided which is the best or most accurate of the three agencies, as there are strong opinions on both sides for all the three agencies.

In calculation of the credit score, these agencies use a formula that is known as FICO. This acronym is named after the Fair Isaac Credit Organization which is one of the first companies to use credit ratings in the 1950s. A FICO score is usually a number between 300 to 900 and roughly gives the risk an individual poses to a lender. While a rating of 300 is considered to be an extremely high risk rating, 900 virtually indicate no risk. In this score, about 30% is dependent on the percentage of your present utilized total credit, 15% depends on how long you have had open lines of credit, 10% depends on how large your past lines of credit have been and 35% depends on the number of delinquent payments you have. Those in the high risk group of 500 and lower may be refused credit while a credit rating of 800 and above, grants the lowest possible interest rates with small amounts of down payment to the individual. As the interest and down payment of a loan is very much dependant on the credit rating, it is very much beneficial to access a credit report from one of these agencies before applying for some credit!