Free Annual Credit Report

What is My Credit Score?

What is my Credit Score?
Is my Credit Score high enough?
Do I have good enough Credit?

Every financial planner will tell you that the number one thing that you need to protect is your free annual credit report. However, how are the credit scores on this report calculated? A variety of credit-scoring statistical models are used to generate credit scores, each of which used unique algorithms. The primary source for credit scores used in mortgage lending decisions are the three national Credit Reporting Agencies: Transunion, Equifax, and Experian. These Bureau collectively store over 450 million files on individual consumers and process over 2 billion pieces of consumer credit data each month. Each bureau has a number of exclusive proprietary credit-scoring models that generate unique credit scores, and consequently, consumers can have more than one credit score.

Credit-scoring models are based upon credit reports of consumers who have acquired credit in the past. These credit reports are statistically analyzed to identify characteristics that predict the likelihood of debt repayment. Each of these characteristics is then assigned a weight based on how well it predicts the likelihood of repayment.

Four categories of data are collected and reported in a credit report: personal information, credit information, public record information, and inquiries. The three credit bureaus independently collect data used to build a consumer credit report.

Five general categories of data are gathered from credit reports and used in credit-scoring models: previous payment history, amount of money owed, length of credit history, amount of new credit sought, and types of credit in use. In accordance with the Equal Credit Opportunity Act, factors include gender, income, race, religion, marital status, and national origin may not be used in credit-scoring models.

Credit scores represent a snapshot of the consumer’s credit history at the time the credit score is generated. Bureaus continually receive new information and update credit report files, and, therefor, consumers’ credit scores can frequently change.

If you are interested in getting a copy of your Free Credit Scores, head over to Free Annual Credit Report and get yours in less than 5 minutes.