Credit Score Calculator Basics

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					Credit Score Calculator Basics

Your credit rating plays an important role in your life. Those with high
credit scores can obtain loans and low interest rates to pay the loans
back. Those with below-average credit scores may struggle to obtain loans
and, if they do manage to get them approved, they can pay much higher
interest rates while paying them back. You are entitled to ask for your
credit score one time per year free of charge (as stipulated by the Fair
Credit Reporting Act--FCRA). Otherwise, you can use a credit score
calculator to help you get an idea of where you stand in the credit game.

If you're considering buying a home or taking out a bank loan for any
type of purchase, you'll need to know your credit score. It's not hard to
find a credit score calculator online. These calculators will give you a
score based on the detailed information that you provide. Your score will
range from 300 to approximately 850 (the average American credit score is
estimated to be about 690) and factors that influence your score are how
timely you pay your bills, how many other credit cards and loans you
have, the rate of interest you are currently being charged and how long
you have had established credit. Once you have this score, you'll know if
you should work on paying off some debts before asking for a loan.

The three major credit bureaus that figure out your credit scores are
Equifax (which uses the BEACON method), Experian (which uses the Fair
Isaac Risk Model), and TransUnion which uses the EMPIRICA method). All of
these models are just variations of the FICO method which was
established, with the help of these three credit bureaus, by the Fair
Isaac company in the 1980. Other lenders may also have their own scoring
methods which add in additional information such as your income or how
long you've been with the same company.

You will be able to find a calculator for each of the above mentioned
methods. The scores may vary a little bit but in general, they should all
be within the same range. Banks will usually take a look at all three
credit scores before making a decision about whether or not to offer you
a loan, what type of loan to give you, and how much interest to charge

But keep in mind that calculators are just to be used as estimators. Your
bank or lender will perform a much more detailed analysis on your credit
status to come up with their own personalizes score.

A credit score calculator can be used together with your lender's
calculators so that you can work out what your monthly payments will be
after you've secured the amount of the loan. As you improve your credit,
you can check the calculators periodically to see if you may qualify for
lower interest rates.

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