Free Credit Report | Free Credit Score

Credit Reports are used by banks and financial institutions to assess credit-worthiness. It is important to give yourself the best credit score. Credit Monitoring and Analysis tools help you to understand your current credit status and enable you to take the necessary steps to improve your credit score. This results in lower interest rates and greater borrowing potential.

Credit bureaus maintain files on any consumer who has ever had some type of credit obligation, such as a loan or a credit card. Credit files include the amount of credit debt, the type of debt and payment history. These files are packaged together to create credit reports.

Lenders and creditors use the information from the credit report in addition to applicant information, to determine a consumer’s creditworthiness. Lenders can look at your credit report from any or all three major credit reporting bureaus.

Credit scoring is the primary way of evaluating a consumer’s creditworthiness. Financing decisions are often based on a credit score.

The FICO score, developed by the Fair Isaac Corporation, is the most popular scoring model. This model is used by lenders and creditors to assess a consumer’s credit risk. The mathematical formula evaluates different kinds of information in a credit report from a credit bureau. The FICO score is established by comparing this information to patterns found in thousands of previous credit reports.

 

The national credit bureaus (Experian, Equifax, TransUnion) use the FICO algorithm to provide credit scores. The bureaus promote their credit scores under a different name (FICO II, Beacon, Empirica). 

Fair Isaac Corporation constantly upgrades its scoring models to generate the most accurate scores. The NextGen (Next Generation) credit score represents the latest innovation in credit risk analysis.

Each national credit bureau offers industry-specific scores. This enables lenders in different industries to evaluate industry-related factors in a consumer’s credit file (lenders in the home and auto finance industry may require score models that analyze the consumer’s home and auto loan payment history).

Although each bureau employs the same scoring methods, the actual score is based on the credit data available in the consumer’s file, which could differ from bureau to bureau. The type of score model requested could also cause the score to differ. Scores generally range from 300 to 850. Higher scores indicate the consumer is a lower risk to the lender.

Credit scores are assessed using some of the following criteria:

  • previous payment history
  • amount of debt
  • length of time credit established
  • search for and acquisition of new credit
  • types of credit established

A consumer must usually have a minimum of one active credit account to receive a score. A limited credit history typically results in a more unreliable credit score.

A poor credit score will improve as the consumer meets credit deadlines and uses their credit effectively. Furthermore, detrimental information in the consumer’s credit history has less effect over time on the credit score.