What is Credit?
Credit, derived from the Latin word "creditus" which means "to believe" is defined as trustworthiness or credibility.

As our society moves further away from cash, your daily finances become more dependent on credit. By way of trust and credibility, our economic society works more smoothly and conveniently. If you choose to use credit with good responsibility, its power will increase with use. If you misuse it, the power will decrease.

What is FICO Score?
In the 1980s, Fair, Isaac and Company devised a mathematical model to predict the credit risk of consumers based on the data collected from an individual's credit report. Today, the Fair, Isaac (or FICO®) system is the scoring model most widely used by lenders. Fair Isaac is an independent company that came up with the scoring method and software used by banks and lenders, insurers and other businesses.

The score ranges from 300 to 850, with a higher score indicating a lower credit risk. For a score to be calculated, your credit report must contain at least one account that has been open for six months or more, and at least one account that has been updated in the past six months.

What is a credit report?
A consumer credit report is a document that contains a factual record of an individual's credit payment history. It is mainly used to judge his/her credit worthiness by lenders.

The credit report not only lists basic information such as your name and social security number, but other information pertaining to your credit, especially your borrowing and repaying habits. Basically, it shows how you treat credit and your relationships with creditors.

As people pay their bills, most lenders report credit payment history information to credit bureaus.

Your credit can determine what you can buy, what type of car you drive, and even where you can live. It is important to maintain the best credit report possible. Each person should check his or her credit report and make sure it is correct.

What is Credit Bureau?
Credit bureaus maintain and update credit information in their computer database and sell it to lenders and other credit grantors in the form of credit reports. Credit bureaus charge the credit grantor a fee for every credit report they sell.

They collect information about consumers' payment habits from various sources including banks, savings and loans, credit card companies, and other financial institutions. These sources are called Automatic Subscribers, who report information on any individual who does business with them. In return, they receive credit reports of potential applicants at discount rates.

Some creditors do not automatically report to credit bureaus. Companies such as insurance agencies, rental agents, utility companies, and medical facilities, report only when payments are severely overdue, collection agencies are hired, or legal actions are taken.

Credit bureaus also obtain information from public records such as bankruptcies, foreclosures, tax liens, and court judgments.

There are many credit bureaus in the United States but only a few main ones. The big three credit bureaus provide nationwide coverage of consumer credit information are: Equifax, Experian, and TransUnion.

However, your credit report from one credit bureau is not necessarily exactly the same as your credit report from another because not every credit grantor reports to all three credit bureaus.