What is a Good Credit Score?

People want to get credit for a lot of reasons – to purchase a house, car, or even obtain a student loan. But, did you know that there is a unique number, which determines whatever you can get those things or not and how much it will cost you? Moreover, that three digit number is called a credit score.

First off, your credit report determines your credit history: how you have paid your bills, how much open credit you currently have and everything else that might effect your credit score. Your credit score is so powerful that it sums up all of your credit history only into three numbers. This three digit number is used to help lenders decide whatever they should give you a loan or not.

Credit score helps any lender identify possible level of risk they need to assume when they lend you money. Although, the same could be done by reviewing you credit report, credit score tends to more more accessible and easier to interpret. The system gives points based on the information provided in your credit report. With this information, lenders can easily determine if someone will repay a loan or not as well as make payments on time.
The most commonly used credit scoring method by lenders is FICO. The major three national credit bureaus have their own versions of the FICO. For example, Equifax has the Beacon system, TransUnion has the Emperica system, and Experian has the Experian / Fair Isaac System.