A credit score is a three-digit number, typically between 300 to 850, which credit bureaus (such as CallCredit, Experian and Equifax) calculate based on information in your credit report. This score is used by lenders, such as Homebuy in deciding whether to give you credit. One way of thinking about it is to see it as a measure of risk to the lender. The higher the score, the better you managed your debt in the past, which makes it more likely that you will be considered low risk and therefore given credit. The formulas that credit reference agencies use are not exactly the same and so your credit score will vary from bureau to bureau. Homebuy will use your credit score as part of its creditworthiness assessment in measuring the likelihood that you will repay the credit.
How is My Credit Score Calculated?
Your credit score is calculated based on a number of factors listed in your credit history including the number and type of credit accounts you have, the amount of available credit, the length of your credit history and your payment history. Each of these factors is assigned a numerical value, and then weighted based on how prominently they affect your creditworthiness.
Why Should I Check my Credit History and Credit Score?
Your credit history and credit score are vital pieces of information that are key to helping you secure your financial life. Lenders such as credit card companies, mortgage lenders, and insurance companies will pull copies of your credit report and credit score in order to decide whether to extend credit or how much to charge for your insurance premium.
Financial services companies tend to group borrowers into segments according to their credit score. These credit score ranges may determine how much you’ll be charged for your insurance coverage or the interest rate you pay on your mortgage, student or car loan or the type of credit card you’ll be offered.