The basics of the credit score calculator - yes basics again
Your credit rating is very important when it comes to applying for loans or credit. Without a good credit score you may find yourself not qualifying for a loan at all, or if you do qualify it will likely be at a very high interest rate. Those people that have a good credit score can easily qualify for loans and loans that have low interest rates reducing the amount of interest to pay back.
You can ask to view your credit score free once a year, which is stipulated by the Fair Credit Reporting Act (FCRA). You can also use a credit score calculator to help you get some idea of where your credit rating might stand.
If you want to buy a home, car or any other big purchase that will require a bank loan then you need to know what your credit score is. There are many credit score calculators online that you can use. With these calculators you will enter the required information and it will give you a score based on those details.
A credit score will range anywhere between 300 and 850 with the average score being around 690. The factors that will influence your credit score are how many credit cards and loans you have, how much credit it outstanding on those loans, how timely you pay your bills and how long you have had established credit. The benefit to knowing your credit score is that you will know if you need to do some work to increase the score before applying for a loan.
There are three major credit bureaus that calculate your credit score and these are Equifax, Experian and TransUnion. They may use different methods to calculate the scores but they are all basically variations of the FICO method which was developed in the 1980's by Fair Isaac company. Some other lenders will also use other criteria for calculating your score such as your income, how long you've been employed in your job and how long you have lived at your current address.
There are calculators available for each of the methods used to calculate credit scores. The scores between companies and methods may vary slightly but will generally be within the same range. Before making a decision about whether to offer you a loan, a bank will often check your credit score with all three bureaus.
Once they know your score they will know whether you are a high or low risk and will decide whether or not to offer you a loan and if so at what interest rate. Online credit score calculators are just an estimate of your actual score but they will give you some idea of what your rating might be. Banks and lenders will use a much more details analysis of your credit to come up with the right credit score.
You can use a credit score calculator along with a lender's calculator to find out whether you might be eligible for a loan and what interest rate you will likely be charged. Then you can get an idea of what your monthly payments will be and whether this is an affordable option for you. If your credit score is lower than you expected then you can work toward improving your rating and then be eligible for a lower interest rate loan.
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Article Source: Messaggiamo.Com
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