Credit Scores in the United States.
Credit scores are a great mystery to many consumers these days. Here we will try to sort out a few of the myths about scores. One myth is that there is one “score”. Not true, there are as many as 15. Each of the three bureaus has a personal score, mortgage score, auto score, credit card score, and insurance score. Each bureau also has a proprietary or “in house” score, just to confuse things more.
A “perfect score” is 850 in commercial uses, while a personal or proprietary score can run higher. This makes your personal score appear higher, because of the scale is different. A score of 600 out of 850 is better than a score of 600 compared to a perfect score of 950. If you look at your personal score, thinking that it is about 700, and you go out to get one of those great car deals out there, you might be surprised to find out that your real score is about 625. It can happen, look at the scale on your personal credit report.
There are three credit bureaus in the United States, and a handful of secondary bureaus. The Big Three usually are the source for major inquiries, like mortgages and auto loans. The other bureaus are used for less crucial decisions, rent inquiries, employment, and some insurance uses. The secondary bureaus usually have data that is a bit older than the big three, they will occasionally do an inquiry to one or more of the big three to update their own database, which they re-sell as requested by their customers.
Credit Bureaus are in the business of selling information about you to lenders; sometimes the data contained in the databases is good, sometimes it is not. It is to your advantage to have a score that is high as possible, this happens when there are more good trade lines on your credit report than bad credit items. Higher credit scores can get you lower interest rates which lower your monthly payments on loans.
If you have information on your reports that lowers your credit score, there are options available to repair your credit rating and raise your credit score. There are full service credit repair firms available, where you have to do little work, to assisted do it yourself credit repair programs, where the cost is lower, and you do part of the work.
