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What is a Credit Bureau? A
credit bureau is a company that gathers information on consumers who use credit
and sells that information in the form of credit reports to credit grantors,
such as banks, finance companies, and retailers.
Credit bureaus keep records of consumer debt and how regularly these
debts are repaid. What
is a Credit Score?
A
credit score assigns a numerical value to the various items of information we
consider in evaluating a credit report. These
numerical values are based upon the analysis of repayment histories of large
numbers of consumers. Various
factors are used to determine the borrower’s credit score number, including,
but not limited to, length of credit history, derogatory credit history,
proportion of available and current credit balances, number of open accounts,
number of recent inquiries, and number of recently opened accounts. There
are several types of credit scores available and a borrower’s score may vary
depending on the type of score a lender requests.
Generic credit scores were created for general use in making lending
decisions and are based on credit data only. Generic Credit Scores FICO (Fair, Isaac, & Company) scores are one
type of generic credit score. FICO
scores range from approximately 400-900. The
lower the score, the greater the risk of default.
Examples of FICO scores include Equifax BEACON, Trans Union EMPIRICA and
Experian/FICO (formerly TRW/FICO). Benefits
to the Consume Credit scores speed up loan approvals to borrowers
with high credit scores. Lenders
are able to evaluate borrower’s credit reputation more efficiently when they
use credit scores as part of their analysis.
Without a credit score, underwriters have to evaluate more factors,
making the process more time-consuming. Credit Agency Links Experian
Trans Union
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