3 Credit Scores – What You Must Be Aware Of

Note: If you are not at all familiar with credit scores and is wonder what are credit scores and credit report scores, you may want to check them out first before proceeding to read this article.

To understand the 3 credit scores you must first understand the concept behind credit scores. Credit scores are used by banks and money lenders specifically to judge the risks present in giving you a loan. Your 3 credit scores reflect your financial viability and tell the lender what the chances are of your returning the loan and what amount of interest he can charge. These 3 credit scores are based on your recent credit history as well as all past activity and also your financial status and property holding.

There are several components which go in to the making of your 3 credit scores but a common question often asked is “why are there 3 credit scores?” The reason for that is quite simple; it is because there are 3 different credit bureaus. The 3 different bureaus, namely Experian, Trans Union, and Equifax, have different databases based on your individual history with them. There are different credit scoring models but the one which is used most popularly is the Fico model. The 3 credit scores calculated by the Fico model decide what kind of loans you can get, loan terms, rates of interest, etc.

So you should look to improve your 3 credit scores as much as possible if you want to get your desired loans. In order to calculate your Fico score, you have to have at least one account with each credit report which has been open and functioning for at least 6 months. You also require some activity in each credit report in the span of the 6 months. This ensures that your credit history is also your recent credit history.

Your 3 Credit Scores

In general when people talk about your Fico score they mean the present Fico score that you have. The scores differ with the different agencies as the information that the different credit bureaus keep on you are different. So in essence you have 3 credit scores which help decide what kind of loan the money lender can provide to you. You should also know that your credit score changes over time; this is done to ensure that the most recent activity is reflected in your credit scores.

The main components of the credit scores are payment history, credit utilization, length of credit history, types of credit and recent searches for credit. All of the above categories incorporate different aspects of your credit history with the bank, some have positive effects and some have negative effects.For example if you make all your payments on time with interest then your credit score will be effected in a positive way, at the same time if your reports show that you make delayed payments then your credit scores will go down. Usually the money lenders use more than one of the 3 credit scores.

Additionally if you owe money to the court through some irregularities then your credit score is negatively affected. Knowing about your 3 credit scores will help you improve your scores and make it easier for you to get loans at good rates of interest. And if you are interested to further understand about free credit scores and how are credit scores calculated as well as getting to know how you can get free credit scores without credit card, you may want to click on the links within this paragraph to get more information.