The score helps the institution calculate the rate of risk hence be able to determine the right approach. The score can be obtained from credit reference agencies like TransUnion and Equifax or/and from credit bureaus.
Still on point, a credit score will determine the rate of interest and the general re-payment terms of a loan borrower. This is to say that someone with a high credit score will have an extended repayment time and a low rate of interest and vice versa for a poor credit score. This is so because poor credit score poses a threat to the lending institutions, hence they put a high interest rate in order to recover their money in the shortest possible time.
Due to the crucial information provided by a credit score, other institutions such as insurance companies, phone companies, and other private institutions are also finding the credit score a very important tool to determine the background of their potential clients and employees.
There are so many ways to determine the credit score of an individual, top among them the Fair Isaac Corporation (FICA) score. The FICA score, which range from 300-850, is very popular among mortgage lenders who use it to find out which borrowers are probable to default mortgage payments.
Initially, credit scores were only accessible to financial institutions, but today the score are being commercialized. By paying a fee of $12.95, one can be able to determine the FICA credit score of an individual on the Equifax website. Experian and TransUnion on the other hand are also offering the same service, but their own credit scores and not FICA score. Experian charges $12.95 and TransUnion charges $9.00, for credit reports that indicate credit scores, that the two companies promise equal that of FICA. The scores can be also be obtained through regular mail, on phone or online.
Some individuals however do not see the need to purchase a credit score as they can get it for free from the three main agencies. Further, other states issue free credit reports in the course of the first 30 days when an individual is rejected by a lending institution, or when one gets poor credit terms due to their credit score. credit repair specialist