CREDIT ANSWERS

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 number 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 number of consumers.
Various factors are used to determine the barrower'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 Consumer
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.