Credit Scores: They Continuously Change

When it comes to financing, your credit score is the most important factor that will determine whether or not you will be able to obtain a loan. You need to understand that your credit score is constantly changing. Through this article, you will be provided with an overview of credit scores and how you can monitor the changes that will be occurring in regard to your credit score.

Your Credit Score -- Defined

Equifax, Experian, and TransUnion are major credit bureaus in operation today. These three major credit reporting agencies encouraged the creation of the scoring system that currently is in general use today. They encouraged the creation of the credit score system that is in wide use today during the 1980s. Fair Issac and Company created the commonly used credit scoring system. For this reason, the credit score system that now is used is called the FICO score.

Each of the credit bureaus use their own variation of the FICO score. The number of the FICO score will fall between 300 and 900. The FICO credit score itself is determined by considering payment history, current unpaid debt, how long you have had credit, number of credit inquiries, and types of credit you’ve had in the past.

How Your Credit Score is Used

The credit score is used by lenders when evaluating applications from consumers for extensions of credit, for loans and the like. The credit score provides a succinct means through which lenders can evaluate a person’s credit history rather simply.

Changes in Your Credit Score

In most instances, a person’s credit score is in a state of flux. Your credit score is subject to change on a continual basis. For example, when it comes to changes in your credit score, the mere act of submitting an application for something seemingly as simply as a retail store credit card will knock your credit score down a couple of points. On the other hand, clearing off ths balance on a revolving credit account can increase your credit score. In other words, there are some seemingly simply things that take place time and again -- things which you do not pay much attention to -- that can change your credit score.

Monitoring Your Credit Score

Because your credit score is such a fluid factor, it is important that you take the time to monitor your credit score and your credit history. In this day and age, identity theft is running rampant. One of the best ways of detecting the possibility that you’ve become the victim of identity theft is a significant fluctuation in your credit score. In addition, the majority of credit reports contain erroneous negative entries. The best way of detecting the entry onto your credit report or erroneous negative information is a marked fluctuation in your credit score.