This is where your finance takes place

The first step to understand how your credit score works would be to get your credit bureau. The Beacon score only gives you a summarized result as a number. In order to know what to do to increase your score and improve your credit rating, you need the Credit Bureau. This is a complete credit history that reflects your financial behaviours.

You can order your Credit Bureau from many companies at a small cost. Equifax for example offer a 3 in 1 report for only $29.95. This package includes the reporting from the 3 major credit reporting agencies: Equifax, Transunion and Experian. There are similar offers like this because credit bureaus differ from one agency to another. The difference can be as high as 50 points on your credit score.

There are several reasons why there is such difference between different reports. First of all, financial institutions don’t report their accounts to all of them. So your Master Card could show on the Equifax report, but not the Transunion’s. Second, every agency has their own way to calculate the credit score. One could grant more importance to the delinquencies and the other could lower your Beacon score because of high balance on revolving credit. Finally, as there are several agencies and several institutions, errors might take place in one report. It is then important to look at all of them to make sure your Credit Bureau is up to date.

Here are the contacts to the main credit reporting agencies:

Equifax
1-800-997-2493 or 1-800-685-1111
P.O. Box 740241
Atlanta, GA 30374
www.equifax.com

Experian
1-800-397-3742
P.O. Box 9595,
Allen, TX 75013
www.experian.com

TransUnion
1-800-888-4213
2 Baldwin Place
P.O. Box 2000
Chester, PA 19022
www.transunion.com

Also known as Beacon score, FICO score or Empira score, the credit score is a numerical value representing an individual’s financial creditworthiness. In other words, this number reflects the level of confidence that financial institution have in regards to grant any kind of loans to an individual.

The Beacon score shows on the Credit Bureau. This is a report maintained and updated on a regular basis. You can find a lot of information such as your date of birth, previous and actual employment, your credit score, the balance owed on any credit account, missed payments and all your inquiries to financial institution (even for your cell phone !). There are three major companies that provide the Credit Bureau: Equifax (equifax.com), Experian (experian.com) and Transunion (transunion.com).

It can go from 300 to 900 points. No Beacon score means that you don’t have a credit history or that you went bankrupt, all your accounts have been written off by the credit grantor and you didn’t apply successfully for any new credit products. The more your FICO score is high the better it is. A score of 700 and up is considered to be good. However, please note that 75% of the population have more than 700.

A high credit score means less risk for the bank. Most of the financial institutions calculate their rates based on this score. So by increasing your credit score, you will be able to get better rate. According to FICO.COM, a $216,000 mortgage over 30 years could cost 5.89% to someone who has a score from 760 to 850 but up to 7.48% for score between 620 and 639. As you can see, the FICO score itself could affect drastically your mortgage payment

The Credit score is fluctuating on a daily basis as you manage your personal credit. Several factors can influence it and many myths exist around this three digit number. I will post several tips and explanation on many topics related to the credit score in the following weeks. Be sure to come back soon!