Credit score companies determine the risk of an individual when giving out almost any type of loan. A high score can lead to paying less interest on a loan and possibly paying less for insurance. Low scores indicate that negative information is present on the credit report.
Credit Companies
Three major credit scoring companies--Equifax, TransUnion and Experian--each use a slightly different rating system to determine a credit score. In addition, the information each of these companies receives varies just a bit, which impacts scores as well.
Annual Credit Report
The Fair Credit Report Act mandates that credit scoring companies must give those who request it a free copy of their credit report each year. Some consumer advocates recommend staggering these reports. Individuals also may buy their score from each of the companies for about $8 per copy. Credit companies often include information on improving the score.
Improving Credit Scores
Credit scoring systems vary, and the information used to determine scores is complicated. Several relevant factors include: paying bills on time, the amount of credit one has, how long a person's credit history is and if any new credit is on the report.
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