You often hear the term "credit bureau". In case you don't know, credit bureaus are institutions that record credit history of all American citizens. Whta for? Well, they sell it to the interested parties, such as banks, financial institutions, major employers, private businesses, and everybody else, who is entitled to know your score. There are 3 major credit bureaus in the US: Equifax, Experian and TransUnion.
Naturally, a question arises: how do they come up with your credit score; with the credit points?
It actually is, a quite complicated procedure, based on the FICO (Fair Isaac Corporation) model. Your final credit score is calculated using the following factors:
your payment history (35%), amounts you still owe (30%), how old your credit history is (15%), new credit applied for (10%), forms of credit being used (10%).
All credit bureaus use a system that has at least a part of it, derived from the FICO formulae. When your personal credit score is determined, the following variables are ignored:
national origin, race, color, age, sex, marital status, your employer, salary, profession, employer, employer, and your domicile.
Concluding, the credit score calculations can contain some errors. It's up to you, to contact the relevant credit reports holders, and clarify any mistakes that were made, as they can be detrimental to your financial standing.
