Credit rating agencies collect credit data to calculate credit scores, emphasizing the importance of payment history and credit utilization in determining creditworthiness.
Credit rating agencies such as Experian, Equifax, and TransUnion collect credit data from financial institutions to calculate credit scores, which are crucial for obtaining loans and determining interest rates.
One of the major factors in determining a FICO Score is the payment history, as it showcases the borrower's ability to pay debts on time.
Additionally, credit utilization or using a lot of available credit can indicate to lenders that a borrower is at a higher risk of defaulting on payments.
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