Understanding The Methods Of Different Credit Score Bureaus

Credit score bureaus are the most important tool a person can use if they have a question about their credit score. There are three main credit reporting bureaus, and each one uses a different method in order to determine your credit score. The three bureau credit report score can help you with errors. Equifax, TransUnion and Experian are the three main credit reporting bureaus. They also help with reporting your credit bureau fico score. The Fico score is used primarily when dealing with credit cards, and has been in use since 1970.

What FICO Is

FICO, or Fair Isaac Score, is a publicly traded company. It has become the best known and most widely used credit score model in the United States. The FICO score is calculated statistically. The higher the score, the better your credit rating is. If you have a high FICO score it can not only help you get a loan from a bank, but can also lead to better interest rates. All there of the main credit bureaus use this method.

Importance of the Score

It can be hard to determine if there has been a credit bureau mistake made because each bureau keeps different records of people. They gather their information from different sources. Each company has their own database of records. That is why a three bureau credit report score gives a more accurate picture of your total credit bureau fico. If one agency has one piece of information about you, while the other two do not, it will be reported differently. When people have a 3 bureau credit report score done most banks will do a comparison of all three reports in order to get the most accurate picture possible.

How the Score Is Calculated

Certain factors go into each and every credit score, regardless of how it is calculated by the agency. The process is very fluid because the factors that determine are changing constantly.

  • 35% of the score is generally related to the payment history. Payment history accounts for most of your credit score, so be sure to stay on top of  your payments.
  • 30% relates to your credit utilization. This can fluctuate more than the payment history because it changes daily. If you have a large balance on your credit card at the time the report is run it can lower your score even if you pay off the amount two days later.
  • 15% of the overall score is related to your overall credit history, so this also varies over time.
  • 10% is based on types of credit used and recent credit received such as opening a new credit card or loan account.

Understanding how your score is calculated will help you get a grip on your credit. You can work to raise your score by simply knowing how it is determined.