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Why should you know your average credit score?
If you have any financial dealings where you have applied for and/or received credit, chances are that you are well aware of how lenders and others covet the information gleaned from your credit score numbers.
"Money and success don't change people;
they merely amplify what is already there."
- Will Smith, Actor |
An average FICO score is based on the credit report information from the major credit bureaus. The average credit score in the US is between 300 to 850 and is based on the overall analysis of the credit accounts on file for the consumer.
The credit score represents the creditworthiness or the likelihood of the person paying off his bills and loans as agreed.
Banks, credit card companies and other lenders use the credit score rating scale as a tool to evaluate potential risk before lending money. It is a way for them to prevent losses caused by bad debt management and to limit their overall risk of taking a loss.
Lenders routinely use the average credit score to decide who would qualify for a loan, as well as what interest rates to charge and where to set the credit limit.
Many employers now conduct a credit check on all job applicants, before they decide who to hire.
Credit score information is sometimes used by companies to determine prices for insurance and to rate potential customers.
The most widely known credit score is the FICO rating, which is used widely in the lending industry.
There are three major credit reporting agencies also referred to as the credit bureaus. These are Equifax, Experian and TransUnion and they collect their own individual credit score information reports.
Under the terms of the recent Fair and Accurate Credit Transactions (FACT) Act, every U.S. resident is entitled to get one free copy of his/her credit report, once in every 12 month period, from each of these credit reporting agencies.
You can get this information at the government-sanctioned credit reporting agency website, at annualcreditreport.com. You can also call 1-877-322-8228 or mail in an annual credit report request form.
It is important that you know your average credit score, determined from the combined reports from all three major credit reporting agencies. Lenders generally make an effort to check all three major credit bureau reports before extending credit.
It is best to know what is on your report before a potential lender or employer sees anything that might be considered derogatory. When planning to buy a new car or a home, reviewing the credit reports beforehand enables you to identify and address any errors or inaccuracies before they can have a negative influence on your credit standing.
Lenders and creditors generally look at the average credit score, based on combined information from the three major credit agencies, before they approve a credit or loan application. Most mortgage lenders look at all three credit reports and credit scores, while some may only use reports and scores from two agencies or just one.
Consumers should always check credit score ratings once a year at minimum. You are entitled to one free copy from each agency every year. You are also entitled to a copy if you have been denied credit because of something in your report - such as bad credit card debt information.
EXPERIAN
P. O. Box 2104
Allen, TX 75013-2104
(888) 397-3742
EQUIFAX
P. O. Box 740241
Atlanta, GA 30374-0241
(800) 685-1111 (order report)
(800) 525-6285 (report fraud)
TRANS UNION
P .O. Box 2000
Chester, PA 19022-2000
(800) 888-4213 (order report)
(800) 680-7289 (report fraud)
Under the Fair Credit Reporting Act agencies and creditors are duty bound to correct any inaccurately reported credit information. You should take quick action to correct any credit history information that is false in order to protect your good name and credit worthiness.
We offer a free tool that explains in detail your rights and how you can legally improve your credit. Get yours at: Building A Better Credit Report.
"Financial peace isn't the acquisition of stuff.
It's learning to live on less than you make,
so you can give money back and have money to invest.
You can't win until you do this.”
- Dave Ramsey |
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Debt is NOT your friend. It's not a wonderful "tool" for building wealth. That's a myth.
