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The Real Credit Score: Your Credit Score

Your credit score is a vital information that tells lenders what to do in your finances. It has your name, addresses, and Social Security numbers. And, if found to be accurate, you’d never be able to sue a lender who inaccurately categorized your payment history, resulting in a denial of services.

According to credit scores, your credit score is typically derived from your credit history and your income. Credit agencies base their estimates on information provided to them by consumers. They look at your credit history, whether it’s a current balance, past payments submitted or rejected, any late fees, present and past addresses, as well as your credit activity. It is not their goal to calculate a perfect score, but rather to help people manage and predict finances.

Unfortunately, most lenders base their assessment of this information on information just submitted, not on fully evaluated data. Experian, Equifax, and Transunion all base their scores on a number of factors. When you apply for a job, applying for tax exemptions, insurance exemptions, private policies, employment insurance, or any other kind of benefits, your credit score is important – but not everything.

When you submit a credit application, most lenders use these types of scores. But some will deny credit to people whose information is missing or have no previous information on their record.

Below is a summary of the credit scores used in credit scoring services. Each score is expressed as a percentage of your overall score. Scores range from 300 to 900 points. For example, an 800 point credit score requires the potential borrower to have a score around 400, while an 800-900 point score requires a borrower to score between 800-850. And, each score is different. They’re comparable to one another, but different than different combinations of credit cards.

Basically, three different credit scores calculate one score for all three credit accounts. (For example, an individual with the same type of credit score has a score of 720.) However, some lenders classify different items and factors as having the same “digit.” (that’s how it reads in the financial information provider’s book.) A credit score is just that – a written estimate, based on the information in your file – an estimate of the level of risk you’ll pose to the lender.

But because differences in information on your credit report are not constant over time (and include age), often lenders overlook some items – such as those used to predict past bankruptcies or closing costs – that might remain useful in the future.

For example, a creditor may want you to have updated your employment history, so two negative results might show up on your credit report in the next three months. An insurance claim that doesn’t belong on your file, for example, might not be included in your credit score, and may still not be important in your present situation. In fact, many of the items that affect your credit repair can be removed from your file without a comment.

As you use your credit report and score to judge someone, lenders may call you by name or refer to individuals by their first name. They may use the word “plain,” “plumb,” or “qualified.” “Qualified,” “Qualified,” or “Qualified Plumb” are all simply variations of “Plumb,” a term borrowed from 18th century author John Grisham, “a Latin name meaning a person who was qualified to hold the office of president/mange of the United States.”

It’s important for lenders to give you fair warning that your information may suddenly take the World Wide Web by storm! In the past, companies would not respond to telephone calls, respond to mail, or mail-order requests. They would send you an online vial containing a denial. Facing this could have been devastating: you would have lost your job, your home, your car, your home’s value, your credit rating, as well as your credit history. Your credit report was created in part, as a test, to see whether you were a “platinum candidate” for mortgages or automobiles.

Over the years, many lenders have corrected problems with their systems – but they still sometimes changed their minds weeks before they were due to receive notification. The Fair Credit Reporting Act (FCRA) requires a lender to make “additional services” available to help defray customer costs. These include providing samples of your credit report, as well as taking steps to correct erroneous or incomplete information in the report.

Here is someone trying to repair an ignorant credit report error. He claims to have a good credit rating but turned away because he received a check for $10,000. He must have realized how ignorant he actually was because he received 5 checks for $5,000 shortly after completing his pre-approved search and qualification process.