Understanding Your Credit Score

Understanding Your Credit Score

February 19, 2019 Off By elaija

The cost of living has gone up and individuals have to rely upon debts and loans. These loans are provided by lending companies on certain terms and condition and the basic criteria remain the credit history as shown by the credit scores.

Credit Score

A credit score is the translation of a person’s assets and financial status into figures. This is used by the lending agencies to gauge as to whether a person is sound to pay the loan or not. The better the credit score, the better are the chances of qualifying for a loan. In addition, better credit scores mean a lesser rate of interest. However, a number of companies have come up that offer loans to the bad credit buyers but it is on tougher terms.

Difference In Credit Scores

The most common incident in managing your credit scores is that there is a difference in data between various lending companies.

One company may be showing you a person with sound credit history and financial stability, while the other may be ranking you in the bad credit buyers. This especially happens when one is applying for bad credit car loans. The problem may be caused by a number of reasons.

Causes Of Different Credit Scores

The credit score is maintained by the Fair Issac & Company commonly called FICO and their manager of operations also accepts that the difference in credit scores is a common happening. It may be caused by a number of factors but it can be averted easily. The biggest reason for this disparity remains the incomplete data with any organization. Few of the other significant reasons are:-

1. The tradeline that is notified to one of the bureaus is not in the knowledge of the other and hence they have not updated their data.

2. The outstanding balance against any of the tradelines may not be correctly noted by the bureaus and hence they may be showing incorrect scores.

3. The delinquency status may not be correctly reported to all the bureaus and hence the credit score will be different from bureau to bureau.

4. The lenders do report the data to all three bureaus but it may be done at different times. Hence the data is not updated at all levels simultaneously.

Correcting Your Credit Scores

As the difference in credit scores mostly arises because of the difference in data between the bureaus, the lenders must try to report the data to the bureaus timely. The buyers should ensure that all their particulars are correctly entered and should keep a track of their financial standing as maintained by the bureau.