A credit score is a number showing the creditworthiness of a borrower. It represents his or her ability to pay his or her debts. It is a three digit number to provide information in your credit report. It predicts the risk of bad debt on loan you borrowed.

Use of Credit Scores

Lenders, like banks and credit card companies work with the credit scores of a customer. It is used to evaluate the potential risk caused by lending money to consumers. Its use facilitates the availability of cheaper credit for consumers. To get loan for home rental or to get utilities without a deposit one must keep a good score. Your credit score matters a lot for the denial or approval of loan and also a low or high interest rate. If the credit score is low then interest will be more and vice versa.

FICO credit score

There exist a number of credit-scoring models, but the most useful is the FICO credit score. Around 90 % of the financial institutions are using FICO scores in the U.S while making decision-making process. From the range of 300 to 850 according to FICO scores, the higher the number, the lower will be the risk.

Vantage Score

In 2006, to compete FICO, the three leading credit-reporting agencies joined together to introduced Vantage Score. The Vantage range from 501–990 showing the higher the with the lower risk. Both of Vantage Score and the FICO score are helpful to conclude how much credit to extend to people and can be used in a variety of applications.

Elements Determining Credit Score.

There are few things which are used to determine the credit score of a consumer. These are

• Payment history: it includes information about the account payment and public records. 35 percent of the Payment history constitutes credit score. Read the full story

According to the central bank and government studies, the US demand for loans fell in the second quarter for every major category bar prime residential mortgages due to tightened credit standards set by the banks making the borrowers cautious.

The US Federal Reserve observed in its quarterly survey of senior loan officers, conducted between July 14 and July 28, that the percentage of banks that tightened loan standards for business and households was slightly lower than in the first quarter.

Read the full story

A good credit score always leads you to gain maximum benefits from your credit card. How you can improve your credit score? What you’ll have to do for it? So here are the five simple tips from which you can improve your credit score and can gain numerous benefits from your credit card.

1- Check The Accuracy of Credit Report

First of all get copies of your credit score then for assurance that information is correct go to www.annualcreditreport.com. That’s the only authentic online source to get a free credit report. According to Federal law you can get your credit report in free every 12 months from three national credit reporting companies.

Except from online source you can call there also on their number 877-322-8228 or complete the Annual Credit Report Request Form and mail it on their address: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348 – 5281.

Read the full story