What is a Credit Score
A credit score is a number expressing one’s creditworthiness, or the likelihood that he or she will be able to pay debts on time. Credit scores are stated in a credit report, a document detailing one’s financial activities such as borrowing, paying bills, and any legal filings (such as foreclosures and bankruptcies). The credit report serves as a lender’s main reference when assessing the risks posed by potential borrowers.
Credit scores and reports are provided by the three main credit bureaus in the United States—TransUnion, Equifax, and Experian. Whenever a person makes a financial transaction, the lender or financial institution concerned forwards the information to these three bureaus. The data are then added to the person’s record and corresponding adjustments are made to the score.
Banks, lenders, and financial institutions are allowed by law to view a person’s credit history and scores. Insurance professionals are occasionally allowed to check one’s credit to determine interest rates and premiums; some agencies will issue a special number called the insurance score for this purpose. Other parties, such as lawyers and prospective employers, can only view a person’s credit history with the person’s consent.
Many sites offer resources and consumer information on credit reports, scoring, and improvement. Some of the most popular sites are Free Credit Report (freecreditreport.com), True Credit (truecredit.com), credit.com, and Credit Report (creditreport.com).