Credit Scores and Credit Reports Explained in One Minute — Transcript

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1. 0:00a credit score is basically a number
2. 0:02that tells institutions such as Banks
3. 0:04how creditworthy you are for example a
4. 0:07bank will look at your credit score when
5. 0:08deciding whether or not they approve a
6. 0:10loan or when deciding how much interest
7. 0:11they'll charge you the better your
8. 0:13credit score is the more willing lenders
9. 0:15will be to give you money and the lower
10. 0:17the interest rates they'll charge you
11. 0:18will be credit scores aren't just used
12. 0:21by Banks though they're used by lots of
13. 0:23entities from insurance companies to
14. 0:24landlord credit scores are calculated
15. 0:27based on information gathered from
16. 0:28multiple sources but mainly based on
17. 0:30your credit report which is a record of
18. 0:32your credit history the credit report
19. 0:35contains information from lending
20. 0:36institutions collection agencies and
21. 0:38even the government for example if
22. 0:41you've paid back previous loans on time
23. 0:43your credit report will reflect that
24. 0:45based on this information your credit
25. 0:47score is calculated through an algorithm
26. 0:49which varies from country to country as
27. 0:51well as from institution to institution
28. 0:53and do keep in mind that a lot of
29. 0:55countries don't even have a credit score
30. 0:57system in the United States your credit
31. 1:00score is mostly calculated based on
32. 1:01credit report information from the top
33. 1:03three bureaus Equifax Experian and
34. 1:06Transunion these three operate the
35. 1:08annual creditreport.com website through
36. 1:10which Americans can request up to three
37. 1:12free credit reports per year one from
38. 1:14each Bureau this is because the fair and
39. 1:16accurate credit transactions act gives
40. 1:19you as Citizens the right to receive
41. 1:20that information free of charge but
42. 1:22remember you will receive credit reports
43. 1:25and not credit scores