How the Credit Report Is Determined?

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In order to qualify for a loan an individual must possess a document known as a credit report. This report generally conveys whether an individual deserves a loan or not. It contains the detailed list of past transactions the individual has undergone. It states whether the past dues are cleared by the candidate on time or not. Any kind of good or bad remark in the report plays a vital role in application for a new loan from a lender.

There are some people to whom the concept of credit report is yet not cleared. Not everyone understands the meaning of the FICO scoring. It refers to a three digit numeral which is cumulation of Fair, Isaac and Co. The score is accessed by the three major brands dealing in consumer credit information namely Experian, TransUnion and Equifax. These bureaus deal with the transactions carried out by millions of consumers all over the nation. A free credit report from the government can also be obtained at annualcreditreport.com. The score that is issued after verifying and calculating the past history of a consumer is generally a representation of credit-worthiness of that particular individual.

The score generated ranges between 300 and 850. This score is accepted by several employers and in several businesses. The score is used even by a prospective employer to judge whether the person to be hired is trustworthy or not. Several monetary and financial sectors dealing with credit and money lending tend to verify a person by this score. Scoring big numbers in a credit record can smoothly pass an individual to apply for a new loan.

The score generated is actually produced after determining several factors. Some of them are listed below:

- A free credit score from the government is generally a representation of one's history related to credit payments. Cases involving late payments or any kind of failure regarding the debt clearing can result in a bad score.

- The present debts are also counted while generating the credit score. People who are already at the verge of their limits to credit can find it really difficult to bag a good score.

- The rest includes the determination of the duration of the credit, the most recent credit details and the various types of overall credit details of the individual.
It is to be noted that an individual using a lot of credit cards is at a higher risk than the individual with fewer cards.

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Source by Maria Mines