Have you recently applied for a line of credit whether it was a credit card or loan? Were you approved or denied? If you were denied, your denial letter may have read something along the lines of “Based on our banks scoring system your information did not score sufficient…” The score they are referring to is your credit score or what some call your risk factor. What is this credit score and where does it come from?
Your credit score will determine the availability of credit for you and also what kind of terms you will be offered. The lender you apply with will want to know how much of a risk they will be taking by extending a line of credit to you. The higher your credit score ranks the less of a risk you are. When your credit score is lower you are less likely to be approved, or be approved at unfavorable terms. Traditional FICO scores range from 300-850, but it’s important to consider that there are various scoring modules available that calculate differently and may not be true FICO scores. Also keep in mind that there are three separate credit bureau agencies. The credit score reviewed is based on different factors calculated within your credit report, and there will be three different reports one each for Equifax, Experian and TransUnion. Although each agency’s credit score differs they are developed by the same methods of Fair Isaac (FICO).
| Credit Reporting Agency | FICO Score |
| Equifax | BEACON® Score |
| Experian | FICO® Risk Score, Classic |
| TransUnion | FICO® Risk Score, Classic |
Your credit score is essentially a story about your past and current credit. Although it may reflect low because of previous struggles, it cannot specifically say if you would or wouldn’t be a great paying and on-time customer. Your credit score does not reflect you as a person. If you encounter any inaccuracies on your report that are holding you back from better credit, also know that there are options available for you. Visit us next week as we will cover “What is a credit report?” Also feel free to share any questions or comments with us below!
MSI Credit Solutions provides superior credit restoration and comprehensive consulting services that are reliable and affordable. For any questions or to schedule a free credit consultation, contact us at (866) 217-9841.
*The information in this article has been provided strictly for educational purposes.
