Important Information on Credit Scoring and its Effects to You
How do credit bureaus compute ones credit scores?
A lot of credit reporting bureaus or agencies gathers information on the subject of the debtors credit history or files from reliable private and public sources. They also collect data from the creditors who extended the loan to the debtor.
Accordingly, the information is clustered into five sets or categories with the corresponding percentages which reflect the importance of each category in the final computation of scores, namely: (1) Owed Amount 30%, (2) History of Payments 30%, (3) Duration of Credit Record 15%, (4) Nature or Kinds of Credit Currently in Use 10%, and lastly (5) Latest Credit Inquiries 10%.
Generally, these credit bureaus calculate the debtors credit score using a three figure number which range from 300 up to 850. The higher the credit score, the better chance of acquiring low interest rates for the loan being applied for and a better opening for wealth accumulation.
The industry of credit-scoring has been generating different opinions and wide-spread reactions to the public. The consumers fear that...
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