What is a credit score?
A credit score is a numerical representation of an individual’s creditworthiness. Credit scores are generated by the three major credit bureaus, Equifax, Experian, and TransUnion. These bureaus collect financial data from banking institutions, credit card companies, lenders and other sources to generate a score for individuals. In Texas, credit scores are commonly used by lenders when evaluating financial decisions. Credit scores are based on the information in a person’s credit report. They range from 300 to 850 and are calculated by a mathematical formula. Factors that are taken into account when calculating a person’s score include repayment history, the amount of credit used, types of credit held, amount of time credit accounts have been open, and credit inquiries. A person’s credit score is an important factor when lenders are evaluating a loan or credit application. Generally, lenders prefer to give loans to individuals with higher credit scores because they are less likely to default on their loans. People with higher scores generally receive better interest rates and terms on loans. It’s important to keep an eye on your credit score as it could affect your financial future. Individuals may obtain a free credit report once a year from the federal government. Additionally, companies offer free credit scores for individuals to check on the status of their credit. The Texas Department of Banking has additional information on credit scores and credit reports.
Related FAQs
What is theCard Act of 2009?What are the penalties for violating the Truth in Lending Act?
What is the difference between a credit card and a debit card?
Can I use a credit card to pay bills?
What is a credit report?
What is the difference between a secured credit card and an unsecured credit card?
What can I do to protect myself from credit card fraud?
Do I have any recourse of action if a lender violates the Fair Credit Reporting Act?
What is a penalty interest rate on a credit card?
What is a credit card agreement?
Related Blog Posts
The Basics of Credit Card Law: What You Need to Know - July 31, 2023The Pros and Cons of Credit Card Use - August 7, 2023
What Is the CARD Act and How Does It Impact You? - August 14, 2023
5 Tips for Understanding Credit Card Law - August 21, 2023
Understanding the FDCPA and Its Impact on Credit Card Law - August 28, 2023