Credit scores are a reflection of your consumer debt. They are very important beyond personal finance and can affect other areas such as job searches and insurance rates. Being vigilant about an accurate credit score leads to many benefits.
Identification
A credit score, according to www.consumersunion.org, is defined as "a three-digit number based on a borrower's bill-paying history and debt profile and statistical information about other borrowers that lenders use to determine the likelihood of certain credit behaviors."
Maximum Score
Credit scores can range between 300 and 850. The higher your score, the better. According to www.consumersunion.org, the scores of average consumers fall within the 600s and 700s.
Credit Bureaus
There are three major credit bureaus that banks rely on to check your credit score: Equifax, Experian and TransUnion.
Free Credit Scores
The U.S. government has set up a website, www.annualcreditreport.com, where each of the three major bureaus must provide a free credit report to you once every year. By staggering each report by four months, you can receive three updates every year on your credit score.
Considerations
According to www.consumersunion.org, the major factors that can influence your credit score include: "previous payment behavior, how much you owe, how long you have held outstanding credit, whether there are a lot of inquiries in your file from prospective lenders, the type of credit you use, and how much credit is available to you."
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