Understanding Credit Scores and Reports at Credit Bureau

What is a Credit Score?

A credit score is a three-digit number that represents an individual's creditworthiness. It is calculated based on their credit history, payment behavior, and other financial factors. The most widely used credit scoring model is the FICO score, which ranges from 300 to 850.

Credit scores are not publicly available, but lenders can access them when evaluating loan applications. A good credit score can help you secure better interest rates and terms, while a poor score may result in higher costs or even rejection.

How Do Credit Reports Work?

A credit report is a detailed document that summarizes an individual's credit history. It includes information about their past borrowing activities, payment habits, and any outstanding debts or collections.

Credit reports are used by lenders to assess the risk of lending to an individual. They also help identify potential fraud and errors in reporting. Consumers have the right to request a free copy of their report once a year from each of the three major credit bureaus: Equifax, Experian, and TransUnion.

Maintaining Good Credit: Tips and Best Practices

To maintain good credit, it's essential to monitor your report regularly for errors and inaccuracies. You can request a free copy of your report and review it carefully.

Additionally, make timely payments, keep credit utilization below 30%, and avoid applying for multiple loans or credit cards in a short period.