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the method used by most lending institutions to calculate your score.
There are three major credit bureaus in the United States—Experian, Equifax, and TransUnion. They all calculate your credit score and will provide that score to you for a small fee. Because each agency calculates your score a little differently, your score will vary slightly from bureau to bureau. However, the Fair Credit Reporting Act guar- antees you access to your credit report for free from each of the three nationwide credit reporting companies every 12 months. Go to www. AnnualCreditReport.com to request your free report online or call 1-877-322-8228. No matter how you request your report, you have the option of requesting the three reports at once or to order them one at a time. If you request your reports separately, you can monitor your credit more frequently throughout the year.
Lenders use the results of the FICO credit bureau score to determine specific reasons for approving or not approving your loan or credit requests. Your score can be anywhere between 300 and 850. Research studies done by lenders indicate that people who have scores higher than 680 are more likely to make their payments on time. People who have scores lower than 600 generally make payments late and are a higher risk for paying back the money they borrow.
What Lowers Your Score?
• Late payments
• Too many accounts opened within 12 months
• Short credit history
• High balances on revolving credit (e.g., store credit cards)
• Tax liens, judgments, or bankruptcies
• Too many recent applications for credit
• Too many revolving credit accounts
Understanding Your Credit
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