A person’s credit score represents his/her creditworthiness, or the likelihood that he/she will pay his/her bills. Credit scores are determined primarly by credit report information from a credit bureau.
The three major credit bureaus are Experian, TransUnion, and Equifax. Americans are entitled to one free credit report within a 12-month period from each of the three credit bureaus, but they are not entitled to receive a free credit score. Income is not considered by the major credit bureaus when calculating a credit score. FICO, the most widely known type of credit score, is a credit score developed by FICO, previously known as Fair Isaac Corporation. It is used by many mortgage lenders that use a risk-based system to determine the possibility that the borrower may default on financial obligations to the mortgage lender. The FICO credit score ranges between 300 and 850. The higher the consumer’s score, the less likely it is that he/she will default on payments.