While just checking your credit score for free may be enough for some people, but it is important to know the credit score formulas lenders prefer to look at for a maximum credit score. There are 3 major credit bureaus that are assigned the task of keeping track of your credit score: Experian, Equifax and TransUnion. Each of them uses a certain formula to come up with your FICO score.
FICO, which stands for Fair Isaac and Company, has software that generates a formula that the 3 bureaus use to come up with your score. To get it, they ask for certain information, such as whether you have taken out debt, how you are paying the debt, whether you have missed payments and even whether a judgment has been entered against you in a court of law.
Once the FICO formula is combined with the answers to these questions, the bureaus come up with a number. To determine your credit score, they generate 3 scores, and between the three, they pick the middle score.
If there are two similar scores, they pick that as the score regardless of whether the third score is higher or lower than the other two. This final score is the one that lenders will be looking at. This is the score that you see when you check your credit score for free.
Get that Maximum Credit Score – What do those formulas put the most weight on when determining a consumer’s score?
For these formulas to come up with a score, what they take most into account is how much you have borrowed and how well you are paying back what you have borrowed. Every enquiry for credit is recorded. For example, if you go down to your local car dealer and ask whether he can help you finance a new car, this will be reported to one of the three bureaus and it has a significant effect on your credit score.
There are other smaller considerations; we already mentioned judgments entered against you, whether you have child support and whether you are paying it, whether you have an on-going matter in court in which you are the defendant and so on.
Get that Maximum Credit Score – How can a consumer use that knowledge to get or maintain a maximum credit score?
You now know what goes into determining your credit score, but how does that help you? First, do a free credit check to see where your credit score stands. FICO scores range 300 – 850. The higher the
score, the better for you. It is important to note here that your free credit check is not the same as you would get for a paid one.
The free credit check allows you to see your credit score and a few other details but if you want a detailed credit report, the 3 credit bureaus allow you to get it for a few dollars.
If you have bad credit, you know what you should be working on getting your maximum credit score; you should clear your debts and reduce on how much new credit you are taking.
If you check your credit score for free and find out that you basically have attained a maximum credit score, keep it that way by paying what you borrow on time every time. It may also be wise for you to protect your score at this point from identity thieves. Scoredriven.com has always been a favorite of mine.