To people who aren’t really financially inclined, the entire field of credit scores and credit reports can be difficult to understand – even downright contrary. It isn’t an accessible thing the way credit information works. That is probably half the reason why you get to come across so many myths in this area.
If you find that you’re really sick of all the misinformation that’s abroad and you want to find a reliable way to educate yourself about how your credit really works, you certainly could go to the FTC’s website or CreditBloggers for some really solid information. Until you find a real education on how your credit works, this is what you want to keep from saying so that no one really finds out about how you are no expert in the matter yet.
Have you ever heard anyone jubilantly saying that their credit score is a specific number? You must never go and say that your credit score is 700 or something like that. Even if it is an impressive number and it makes you happy. The thing is, you don’t have “a credit score”. You have several. And anyone who talks about their credit information like there was just one credit score instantly exposes themselves as somewhat ill-informed. Not only that, your credit score isn’t a steady figure either. It always keeps changing from hour to hour.
Still, most lenders tend to use the three FICO credit scores that range from 300 on the low end to a cute 50 on the high end. These come from the three largest credit bureaus, and they all use the same FICO formula to try to put a number on your financial reliability. Every one of the credit bureaus uses a different name for their score. Trans Union calls its FICO score the Empirica. Experian calls theirs the Fair Isaac Risk (talk about pretentiousness) and Equifax calls it the Beacon.
If the number you are looking at it doesn’t go by one of these names, you’re looking at the gold standard in credit scores. You’re probably looking at one of the competing ways credit is scored. Experian no longer sells its credit scores to the public; the other two do though. So the educated way to talk about your credit information would be to really spell it out – what credit bureau scores you at what level.
Some people just hate their credit information. They feel constantly judged and they like to badmouth it. That’s when they end up saying that credit scores are a concept invented by the lenders to help them profiteer off poor borrowers. Not that this is a wholly misguided way to look at it. Credit scores really were dreamed up by the lenders for their own purposes. Why, at one time they didn’t even tell you that such a thing as a credit score existed. Still, it isn’t some kind of secret society meant to gouge you. Credit scores even if they weren’t designed for you come, still do benefit you, the everyday borrower.
Lenders who is in possession of a credit score, if it is a flattering one, really do come by some extra confidence in making the loan. For really good credit scores, they will ease the rates they charge you. Also, credit scores allow far more scientific lending. It used to be that blacks and women found it harder to get competitive loan rates at one time. Today, while the kind of discrimination still does exist somewhat, credit scores do level the playing field to a remarkable extent.