Credit Reports And Credit Scores
Credit reports give way to credit scores that are mere numbers. Every credit score depends on the content of information that is present on the credit report, hence making both credit reports and credit scores strongly interrelated. High credit scores mean that the person or the organization holds a clean credit report and there is no debt or loan that is left unpaid.
There are numerous advantages of bearing a high credit score, which is in turn the result of maintaining a good credit report. One of the most important advantages is that loans and debts can be availed by the individual at decently low rates of interest. The processing of loan will also be easier with maintenance of good credit history since the lender will have an impression on the person who borrows, that the individual is capable and trust worthy of handling the credits. What matters most to lenders is the credit score than the credit report since the credit score will speak for itself about the credit report.
The credit score can also be called as the FICO score since it is developed by a body known as the Fair Isaac Corporation. Credit scores may range from 300 to 850 and a score of about 700 is considered a high credit score and a person having such a high score is regarded financially healthy. Credit scores are also taken care of by the credit bureaus who take the responsibility of documenting the credit reports. Score keeps fluctuating with time since the credits may not be utilised the same way always. A lot of factors are taken into account for deciding upon the credit score. Some of the factors are as below:
- It is important that the credit history is not too short. Having a short history of credit implies that the borrower has not had any experience of handling money.
- The debts that have been paid account for around 30 percent of the FICO score since it conveys how well the credits have been managed and analysing this part will decide if the debts have been paid within the specified terms or not.
- The credit score also depends upon the negative information commonly called as dings. Credit score varies accordingly if there is an amount that is still owed by the debtor in any form.
- Any loans that have been applied simultaneously will leave a decrease in the score since it shows that more and more funds have been requested for, due to mishandling of money and the credits available.