Credit Card FAQ

What Does Credit Score Mean?

11 December 2012 by CreditCardsCo™

If you haven't dealt with a credit score or only marginally heard the word while you have been buying, selling, or even subscribing to the services of a phone company, utility company, or a mortgage, that will change at some point in your life. A credit score is a common term that is widely spreading around the world and you will want to stay away from its darker side.

What Does The Term "Credit Score" Mean?

A credit score is like any other score – a numerical value; a value that determines your worthiness and the chances of you getting a loan or mortgage, and the interest rate you will be paying. In other words, it is a number generated by a formula to determine the percentage of you successfully paying back the money you owe. Usually the number is released from credit bureaus and it is based on your credit reports.

How Does My Credit Score Affect Me?

A credit score nowadays is used by several companies and institutions to calculate the risk their customers pose when they are billed. At first, it was banks and loan companies that used the system to make sure that their customers would always pay their bill; those with low credit score are denied some services and features.

Nowadays however, a credit score is used by landlords, banks, phone companies, and many other companies.

How Can I Interpret The Credit Score?

Well there is no one way to do it as there are many factors that affect the credit score; not only that, the score itself is a relative number. For instance there are many companies around the world which create these scores and each country has its own company. These scores also depend heavily on the economy of the country and its strength, the industry the score is produced for (cell phone industry, loans, etc...), and of course we can't neglect how much of a risk taker the service provider is.

A credit score is the worthiness of a person to pay his or her debt or bill. However, in some countries the term are different. In Austria, a credit score is a blacklist of which credit bureaus keep around with people that didn't pay their bills. The list itself isn't nationally used everywhere, but it is heavily used by cell phone carriers. Yet, consumers are given the right to get a free copy of their credit report once a year, much like the United States.

Canada is slightly different than the United States in that as long as the consumer can present a written form (or ask for a printed version of the report) s/he can request any number of credit reports in a year.

What Are The Major Companies That Handle Credit Scores?

There are many companies out there that handle credit scores for each country as listed below.

The major company that handles credit score equations and formulas in the United States would be FICO (Fair Isaac Co.), while on the other hand in India you can find The Credit Information Bureau (India) Limited (CIBIL) handling this information. In Canada however, Equifax seems to have sprawled its existence from the United States. Yet, in Norway you can find both Dun and Bradstreet, and Experian (which seems to have some roots in both the United States and Canada), handling the credit scores among others. In Sweden it is the Swedish Enforcement Administration and in the United Kingdom it is the Financial Services Authority.


Whether you heard the term or haven't dealt with it at all, it is highly likely that you will have to keep a keen eye on your credit reports with the current direction in the market. Many service providers are implementing the system and most likely you will have to be up to date. Most of the companies and institutions offer yearly reports so it would be wise to go through them and always make sure you are in a good standing.

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