What is a credit score?
A credit score is a snapshot of your financial trustworthiness represented as a number. Lenders use this number to help them determine the risk in lending money to you. It is an objective, non-biased lending tool used by lenders to provide you with a faster, fairer, and more consistent response.
The Credit Score is made up of six main categories of information from your credit report:
- Payment history (maintaining credit)
“What is your track record?”
- Amount of credit you owe (total balances)
“How much is too much?”
- Utilization of credit
“How close are your balances to your credit limits?”
- Length of time credit established (credit experiences)
“How established is your credit?”
- Acquisition of new credit (new accounts and inquiries)
“Are you taking on more debt?”
- Types of credit established (credit mix)
“Is your credit a healthy mix?”
What is a factor description?
- It explains the top reasons why your score was not higher.
- It provides more detail and, therefore, is more useful than the score itself in helping you determine where to concentrate your attention.
- When you receive your TransUnion Credit Score, up to four factor descriptions are included.
How can I improve my score?
- Focus on the factors that were returned with the score to determine the main areas that impacted the score.
- The first two factors had the most effect on the calculation of the score.
- Review your credit report for accuracy.
- Maintain a good credit standing and exhibit responsible credit behavior. The score usually reflects payment history over time with emphasis on recent information. The score can improve as you continue to establish a pattern of paying bills in a timely manner and using credit conservatively.
What is considered a good score?
- There isn't any one score cutoff used by all lenders.
- There are many different score ranges used by different scoring models, so it is hard to say what a good score is outside of the context of a particular lending decision.
- Your lender might be able to give you guidance on the criteria for a given credit product.
Why don’t I have a credit score?
A credit score is not calculated if any of the following are true:
- The credit file is suppressed.
- The consumer is less than 16 years of age.
- The only accounts on the credit file are authorized user and/or collection accounts.
- The account references a person associated with the account as deceased.
- The SSN on the report is reported in the Social Security Administration’s Death Claim Index.
- The credit report contains no trades (too thin).
- The file has no updates or inquiries within the last 24 months.
What type of information does not influence my credit score?
The following information does not influence the credit score:
- Race, color, religion, national origin, sex, and marital status
- Employment information
- Place of residence
- Interest rate being charged on a particular credit card or account
- The following types of inquiries:
— Requests you have made for your credit report (Consumer Disclosure inquiries)
— Requests made by lenders to provide you with a “pre-approved” credit offer (Promotional inquiries)
— Requests made by lenders to review your account with them (Account Review inquiries)
— Inquiries posted for employment or insurance purposes
Is there just one type of score?
No, there are literally thousands of score models used in the credit industry which consider different variables for different types of credit.
If you would like to know which scoring model the creditor is using, contact the creditor involved directly.
Are all scoring models alike?
There are many different scoring models that predict different types of consumer behavior, such as likelihood to carry a balance on a revolving account, or the likelihood to fall behind on an account. The scoring models are based on many factors including debt to income ratio, number of delinquent payments, or number of open accounts. Each creditor has different criteria for granting credit and might view the credit information differently. Any creditor using a score to deny credit must tell you which item(s) in your credit report contributed to the decision.
Who calculates credit scores?
When a lender or insurer requests your credit score, it is calculated by computerized, statistical scoring models.
How are credit scores calculated?
Numerical weights are placed on different aspects of your credit report and a mathematical formula or computation is used to arrive at a final score.
Why do lenders use credit scores?
The score is one of many pieces of information the lender may use in evaluating your credit application. It gives lenders a fast and objective measurement in determining the risk in lending money to you. Because of credit scores, you might get a loan faster and the credit decision may be fairer.
What is a good score to have?
Since there is no one score cutoff used by all lenders, it is hard to say what a good score is outside of the context of a particular lending decision. Your lender may be able to give you guidance on the criteria for a given credit product.
How can I find out my TransUnion score?
TransUnion will be glad to provide you a copy of your consumer disclosure with your TransUnion VantageScore for a fee of $9.95 plus the price of the credit report.
What is VantageScore?
VantageScore is the first — and only — industry credit score model that was jointly developed by all three national credit bureaus. A credit score is calculated using a scoring model that measures the positive and negative factors from your credit report. This score represents the likelihood that you will repay a debt as agreed.
What is the score range for VantageScore?
901 – 990 A
801 – 900 B
701 – 800 C
601 – 700 D
501 – 600 F
Once my credit report is updated, how long will it be before my score is updated?
All updates or changes made to your credit report are immediately considered when calculating your next credit score.
What is an inquiry on my credit file?
An inquiry is a statement of fact. It indicates that a company with a permissible purpose has accessed your credit file. For example:
- A credit grantor, insurer, or other authorized party has received your credit report.
- A credit grantor, insurer, or other authorized party has received you name and address information for the purpose of offering credit.
- An authorized potential employer has received your credit report.
- You have received your personal credit report.
Can inquiries affect my score?
While past payment history and use of credit are strong indicators for future payment performance, inquiries have a relatively small impact on your credit score.
Does every inquiry affect my score?
No, the only inquiries that might affect your credit score are those initiated by you for specific credit transactions including mortgage, credit card, auto applications, and insurance. The score does not include inquiries when:
- A credit grantor, insurer, or other authorized party has received your name and address information for the purpose of offering you credit.
- A credit grantor, insurer, or other authorized party with whom you have a business relationship has posted an account review inquiry (requests made by lenders to review your account with them).
- An authorized potential employer has received your credit report.
- You have received your personal credit report.
Will I be penalized for shopping around for the best interest rate?
Most scoring models take the appropriate steps to make sure your score is not lowered because of the multiple inquires that might occur in a specific time period as a result of shopping for the best terms in an automobile loan, home loan, or insurance coverage.
Who decides if I get my loan?
Loan officers decide if you get your loan. Credit reports and credit scores are tools the loan officer uses to help make the credit granting decision. Lenders vary in how they interpret the information on the credit report and credit score. Variations might also include how they weigh the importance of income, length of employment, and value of assets and collateral.
How do I find out more information about my Fair Isaac Corporation (FICO) score?
If you would like to know the specifics of how scoring models are developed or information about your FICO score, you should contact Fair Isaac at (800) 777-2066. You can also visit Fair Isaac’s Web site at www.fico.com or at www.myfico.com.
What is an Insurance Score?
An insurance score is a number that represents your likelihood of having an insurance loss in the future. It is calculated by applying a mathematical formula to the data from your credit report. Your score simply represents a snapshot of your credit report on the day it was calculated. Your insurance score may be used as part of the underwriting decision when trying to obtain insurance.
How are insurance credit scores determined?
There are many different insurance scores in use. Each scoring model measures different factors, depending on how it is used. The scoring models are built and tested to be predictive for their particular applications. You should contact your carrier if you have specific questions on the insurance model they use.
What Factors Influence Your Insurance Credit Score?
There are various factors which help to determine an insurance credit score:
- Payment History
- Outstanding debt
- Length of credit history
- Applications for new credit
- Number and types of credit accounts
- Amount of credit used in comparison to the amount of credit available
- Severity and frequency of derogatory credit information such as payments, bankruptcies, charge-offs, and collections
Note: These factors can have either a positive or negative impact on your insurance credit score. Factors that have a negative impact on your score are accompanied by Reason Codes.
What is a Reason Code?
A reason code is three-digit code accompanied by a description of a specific credit factor that can be improved upon. It explains why you did not receive the most optimal score for a particular factor. A reason code will only be returned if you did not receive the very best possible result for a variable. Federal and state laws generally require that reason codes be returned unless the very best possible score is achieved.
Example of a TrueRisk description: Months since most recent delinquency is between 0 and 4. Optimum value is no delinquencies. Score will improve with time as delinquencies get older and there are no new delinquencies.
Note: Not all carriers will send the three-digit code, they may just send the description.
How is an Insurance Score different from a Non-Insurance Score? (i.e., VantageScore)
It has become increasingly common for insurers to examine your credit data. This is because studies have shown that credit history helps to predict the likelihood of future insurance claims and losses. It's important to remember that insurers use your credit data differently than a creditor or a lender, making it necessary to use different scoring formulas to evaluate your credit history.
Insurance scores range from 150 to 950, which is different than credit scores which typically range from 300 to 850. Since insurance companies look at different aspects of your credit history than lenders or creditors, they have developed different formulas to evaluate your credit. This larger range is helpful because it enables people to differentiate between their credit scores and insurance scores. It also helps to determine exactly how your insurance risk compares to other insurance seekers.
Just as lenders look at credit differently for mortgages and auto loans, insurers look at credit differently when they are evaluating a consumer for an auto insurance policy or a property insurance policy. TransUnion's Insurance Scores allow you to see both your auto and property scores and the factors that impact each.
How does my insurance score impact my insurance rate?
There are multiple factors that go into the calculation of an insurance score. Generally, the higher the score will mean a lower rate, the lower the score the higher the rate. Credit is one of many variables that carriers use to determine the rate of a policy. Many other factors may be evaluated as well including: age, gender, geographic location, driving record (auto insurance) or property value (home insurance).
The Reason Code(s) returned do not accurately reflect what is on my credit file. Why?
If you feel there may be a discrepancy with the Reason Codes, you should contact your insurance carrier and follow their dispute process. If you feel there is a discrepancy on your credit file, I can initiate an investigation for you on those items in question.
I have good credit, so why did my rate increase?
Your credit score is only one of many factors that go into an insurance rate. You will need to contact your insurance carrier to find out why they increased your rate. TransUnion is not part of the decision-making process.
Can I get a copy of my Insurance Score?
Yes, you can contact your insurance carrier and they will provide you with a copy of your score.
What does the TransUnion Score Page look like?
Click here to see an example