Understanding the Credit Score Explanation.

Trying to get a full out credit score explanation can be a lot like trying to figure out how they get the soft flowing caramel into the caramel bar.

But that doesn’t mean your credit bureau doesn’t owe you a full explanation when it comes to your credit score but it does mean that you’ll have to be persistent.

Before seeking any explanation, you might want to do a little bit of research and figure out just how your credit score is calculated in the first place.

You should probably know that a credit score is really a statistical means of determining how likely you, the borrower, will pay back any given loan.

When you are seeking a credit score explanation, you should be aware that your credit score is actually based on all positive and negative aspects of your credit report – not necessarily by the assets and incomes that appear on your financial records.

This type of information will be readily available to you state.

Of course, what won’t be available if you ask for an explanation for your credit score is exactly how that credit score was determined.

No credit scoring company will ever release the formula they use to calculate your credit score.

So don’t even bother seeking that explanation because the best you can do for an explanation of your credit score is to closely study the numbers and letters that always accompany your credit score as those credit score numbers, evidently, require no explanation.

Why Your Credit Score Costs a Fortune

Credit Score Explanation

Credit scores and credit reports are different. The credit score gives you a number score from 300 to 850.

When you buy your score, you get a credit score explanation of what the score means and the top reasons your score was not higher.

The credit report has specific information credit bureaus (now called consumer reporting companies) collect from your creditors.

A new law requires the credit bureaus to give you a free credit report once a year.

These free credit reports are being phased in across the country from west to east between December 2004 and September 2005. You have to pay to get your credit score.

Your score from one credit bureau may not be the same as your score from another since each bureau collects its own data that is used to figure the score.

However, scores change as your credit report is continually updated.

There are several ways in which to raise your credit starting with inspecting your credit report and correcting any errors as your credit report is the basis for your credit score.

One study found that 29% of credit reports studied had serious errors.

Another option is to pay your bills on time because paying late hurts your score more than anything, except not paying at all or bankruptcy.

It sounds simple but many people fall into the habit of not paying bills on time.

All this for Three Little Numbers

We depend on credit for so many important things in life, whether it’s for buying a car, house or computer or getting a student loan so understanding the credit report explanation is incredibly important.

A three-digit number, your credit score, can determine whether you can do these things and even how much it will cost you.

How can a simple number determine whether you can buy a house or car?

If you’ve read How Credit Reports Work, you know that your credit report contains a history of how you’ve paid your bills, how much open credit you have, and anything else that would affect your creditworthiness.

Your credit score boils down all of that information to a three-digit number.

Using the credit score, lenders can predict with some accuracy how likely the borrower is to repay a loan and make payments on time.

It’s how electronics and department stores can offer instant credit.

This incredibly important number, which affects how much you pay for credit, insurance and other life necessities, used to be hidden from consumers.

Until recently, only lenders and other businesses that used the score could access it.

Fair Isaac and Company, which developed the score, felt that the score would only confuse consumers since there was nothing to tell them what it meant or what lenders were looking for.

In 2001, however, all of this changed due to pressure from the U.S. Congress and industry and consumer groups and now you can view your credit score for a fee from credit reporting agencies and credit monitoring services and they will also offer a credit score explanation.