What Does Your Credit Score Tell You?
Simply reading your credit report is not enough. More importantly, you should understand how every information in your credit report affects your credit status and your score. To help you better understand your credit report, here is a credit report guide for you which focuses on the FICO method of credit scoring.
Today, the three major credit bureaus and other reporting agencies as well as creditors make use of the FICO system in calculating credit scores. However, each credit reporting agency does its own variation of the FICO scoring method. Each credit bureau does its own independent reporting. If you compare each credit report that you obtain from each bureau, you may find that they are not exactly the same. Your credit report score may be different from each one. For this reason, it is recommended to obtain a copy from all three credit bureaus in order to check the accuracy of each.
Although, there may be some variations in how credit bureaus do their report, the method of calculation is based on the same factors. With the FICO method, your total credit score is calculated based on the length of your credit history, the types of your accounts, the timeliness of your payments, your outstanding balances and your credit limit usage. Based on this scoring system, each of these factors are given a certain percentage to add up your total credit score.
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