Your credit score is an integral component of your financial life. It’s essential that you understand what it’s all
about. Lenders, landlords, insurers, utility companies and
perhaps even employers look at the credit score of yours. It is derived from
what is in your credit reports, as well as it ranges between 300 and also
Nonetheless, based on a survey that has been recently conducted,
nearly half of all Americans do not know how these scores are derived or even what factors are used to come up with them.
For instance, if the credit score of yours is 580 you are probably
going to pay nearly 3 percentage points more in mortgage interest compared to someone that had a score of 720.
Or maybe another way of looking at it, if you’d a $150,000 30-
year fixed-rate mortgage and your credit score was good
sufficient to qualify for the most effective rate, your monthly payments would be aproximatelly $890. This is according to Fair Isaac, the
company which made the FICO score and who the rate is named after (Fair Isaac COrporation). If perhaps your credit is
inadequate, nevertheless, it’s quite possible that you would have to shell out greater than $1,200 a month for that same loan.
With so much based on the credit score, it’s important
to understand what it is all about and what are the things that affect it.
Unfortunately, people commonly have a great deal of misinformation and misunderstandings about the credit score of theirs. The following are
five of the most popular credit score myths and along with it
the real facts:
MYTH #1: The main bureaus use different formulas for calculating the credit score of yours.
calls the score of theirs the “Beacon” credit score, Transunion
calls it “Empirica” and Experian gives it the title “Experian/Fair Isaac Risk Model.” They each use different
names for the credit score, but they each use the identical method to come up with it.