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[H1141]How To Get Credit Score

by Dr. Drew Henry, Dr.

Imagine that you are going into a lender's office prepared to apply for and receive a loan. You know what your credit scores are and you even got one score from each of the three major credit bureaus: Equifax. Experian, and TransUnion. You are shocked when your loan is denied, or maybe you were approved, but the interest rate is much higher than you anticipated. How can that be you say? My credit score is good, I know I checked. Maybe it's not as good as you think. It all depends on there you got it and what kind of credit score it is.

The fact is there are several different credit scoring methods. Credit scores calculated from the same credit reports can differ substantially from credit scoring method to credit scoring method. So how can you ever know what your credit score really is? Well, luckily, 75% percent of lenders use FICO scores exclusively and you can purchase FICO scores yourself--you just have to know where to go. ()

FICO credit scoring is a numeric method of scoring your credit worthiness developed by Fair Isaac and Company. Your credit score is a number between 300 and 850 that tells creditors how likely you are to pay your bills. The higher the number, the better it looks to potential lenders and creditors.

The three major credit bureaus each have their own version of the FICO score: 1Equifax uses the Beacon system, 2TransUnion uses the Empirica system, and 3Experian uses the Experian/Fair Isaac system. Despite each credit bureaus' use of their own versions, all systems are based the original Fair Isaac FICO scoring method, so each credit score calculated with these systems are generally called FICO scores. However, although most lenders do use FICO scoring, some lenders may have their own scoring methods.

Adding to the confusion is the credit bureaus themselves. Recently, Experian revealed that the national average credit score of its consumers is 678. This is very misleading to the average consumer. When you buy your credit report and score directly from Experians website, you are getting what they call the "PLUS Score," which is NOT a FICO score, and is NOT used by lenders anywhere. (Equifax is the exception--you can buy your FICO score directly from them at their website; however, the only place to get all three scores together is at .) The 678 PLUS Score reported by Experian is actually the average of consumers' PLUS Scores, not their FICO Scores.

It can be clearly seen that the PLUS Score (and all Non-FICO scores) are useless. Not only that, but such hype misleads consumers into purchasing their PLUS Score thinking that they are getting the same credit score that their lender will use. Non-FICO scores are worthless not matter what the credit bureaus or any website selling non-FICO scores claim. Even a few points difference in your credit score can mean confronting the reality of the loss of thousands of dollars out of your pocket--a loss that you probably didn't plan for. The next time you want the most accurate credit score available, do yourself a favor and get the industry standard: the FICO credit score.

Look over this information to ensure it's accurate because it is not unusual for there to be multiple spellings of your name or more than one Social Security Number. Your report may also include your date of birth, previous residences, driver's license number, your employer and your spouse's name. Don't worry about this information too much, as it's all confidential and security-protected.

The main section to look at in your credit scores report is your "Credit History" or "Trade Lines." Your accounts will fall into 1 of 5 categories: Real Estate (first and second mortgage), Installment (car loan, regular payments), Revolving (credit cards), Collection (seriously past due) and Other.

Each account will list the creditor/lender's name and the account number. Sometimes, more than one account will be indicated on your report from the same creditor, especially if it gets sold off into collection, but only one account should be marked "open" at a time.

You should be able to see when you first started the account, the type of account, the total amount owed, how much you still owe, the status of the account (open, inactive, closed, paid) and how well you've paid the account. If it's noted "charged off," that means the credit made efforts to collect but gave up.

If you see a code like "R1," then this generally indicates how well you've been at paying on a scale of 1 to 9. If you have had any late payments on your account, then you'll see a little square with 30, 60, 90 or 120 in the box, indicating how late you were.

If you see a green OK and a 0, you're in good shape with high scores. If you see "charged off," "bad debt" or "placed in collections," then your account went 120 - 180 days past due and was sold off to debt collectors. Charge-offs and Debt Collections are bad since these poor credit scores remain on your report for seven years.

If you find a mysterious account or an incorrect amount owing on your credit score report, then you can fill out an online form to dispute the claim. The most recent estimate indicates that as many as 80% of all reports have some kind of misinformation.

Financial advisers recommend that you keep up with your credit score and check up on it at least once a year to ensure accuracy. Now that you understand some of the sections and terms, you'll be better prepared.

Charge-offs on your credit score report will be the #1 reason you are denied credit. Often, in order to qualify for new loans, you'll be required to pay any unpaid charge-offs. Once you pay the full or partial amount, it will be noted "paid charge-off." This will remain on your credit for seven years and 180 days from the date of your first nonpayment.

You can hire legal advisors who may be able to get charge-offs taken off your accounts. A company like Lexington Law Firm ("Lexington Law") specializes in legally disputing and removing paid charge-offs to help you improve credit scores, which might be a good bet if you're planning to buy a house or make a big financial investment.

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Both Dr. Drew Henry & Mike Selvon are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Dr. Drew Henry has sinced written about articles on various topics from Cosmetic Surgery, College Student Loan and Home Management. Dr. Drew Henry maintains a number of websites about Loans, including ,. Dr. Drew Henry's top article generates over 12100 views. to your Favourites.

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