Why You Need To Care About Your Credit Score
Posted in Finance on 08/28/2010 02:57 pm by
David Faulkner asked:
Companies providing credit have certain criteria’s to ensure whether u will be able to pay back your loans or not. What ever sort of loan it may be, a car payment, a Visa or MasterCard or Discover or American Express, a department store credit card, a gas company credit card or a mortgage, they are all clubbed under one category and then accordingly a credit score is maintained by all the three big credit companies in United States of America. The credit score is calculated not only keeping in view the current unpaid bills but the complete account history and accordingly they analyze whether their money with you is safe or not and what more can be offered to you. So credit score does make a whole lot of a difference.
Criteria of credit score:
Most of the times a digit most probably ranging between 450 and 850 are allotted to the holder according to which your reliability is calculated by the bureau. The credit score system cannot be said to be fool proof, in fact there are some flaws in it. Some times a credit may be reflecting in more than bureau and as time passes as do the contracts and staff. Any errors that are left are untouched and remain there as it is. The credit company for the lender has changed but the defaults are still carried forward. This is not the case with Mortgage Company, that an exception, as it is reported to all the three bureaus depending upon the amount.
Credibility Of the system:
Another factor which raises eyes on the credibility of credit scores analysis system is the amount of data a credit bureau has to maintain. Such huge data can’t be errorless, not their fault. Not only they Keep track of your current status but also maintain the complete previous record. The total amount of data sums out to billions of records considering the number of businesses and customers in the country. According to studies around 10 percent of the records are corrupted, which is a lot.
No bureau can figure out the worthiness of a customer according to the credit score as the bureaus [http://www.creditscorereportguide.org/Experian_Credit_Report/] do not share their data with each other and a person being very appropriate in one case might be a defaulter with the other bureau. So the credit score is not an exact picture of your credit history but just a hypothetical thing.
What else is the option for us? All we can do it keep a close vigil on our own track record. One should not just rely on one of the bureaus and get regular statements from all the three agencies Equifax, Experian and TransUnion and check them regularly. In case of an error we must report it back and they have to either justify the thing or refund it. This process must be followed at least twice in a year so as to maintain your credit score as it does reflect how you have been in handling credits.
Lonnie
Companies providing credit have certain criteria’s to ensure whether u will be able to pay back your loans or not. What ever sort of loan it may be, a car payment, a Visa or MasterCard or Discover or American Express, a department store credit card, a gas company credit card or a mortgage, they are all clubbed under one category and then accordingly a credit score is maintained by all the three big credit companies in United States of America. The credit score is calculated not only keeping in view the current unpaid bills but the complete account history and accordingly they analyze whether their money with you is safe or not and what more can be offered to you. So credit score does make a whole lot of a difference.
Criteria of credit score:
Most of the times a digit most probably ranging between 450 and 850 are allotted to the holder according to which your reliability is calculated by the bureau. The credit score system cannot be said to be fool proof, in fact there are some flaws in it. Some times a credit may be reflecting in more than bureau and as time passes as do the contracts and staff. Any errors that are left are untouched and remain there as it is. The credit company for the lender has changed but the defaults are still carried forward. This is not the case with Mortgage Company, that an exception, as it is reported to all the three bureaus depending upon the amount.
Credibility Of the system:
Another factor which raises eyes on the credibility of credit scores analysis system is the amount of data a credit bureau has to maintain. Such huge data can’t be errorless, not their fault. Not only they Keep track of your current status but also maintain the complete previous record. The total amount of data sums out to billions of records considering the number of businesses and customers in the country. According to studies around 10 percent of the records are corrupted, which is a lot.
No bureau can figure out the worthiness of a customer according to the credit score as the bureaus [http://www.creditscorereportguide.org/Experian_Credit_Report/] do not share their data with each other and a person being very appropriate in one case might be a defaulter with the other bureau. So the credit score is not an exact picture of your credit history but just a hypothetical thing.
What else is the option for us? All we can do it keep a close vigil on our own track record. One should not just rely on one of the bureaus and get regular statements from all the three agencies Equifax, Experian and TransUnion and check them regularly. In case of an error we must report it back and they have to either justify the thing or refund it. This process must be followed at least twice in a year so as to maintain your credit score as it does reflect how you have been in handling credits.
Lonnie