What’s Your Score? The Basics on Credit Scores

Can you recall a time when you were purchasing a big-ticket item, a car for example, and the salesperson steps away into the office?   Chances are, that salesperson is checking your credit score. 

So what is a credit score?  Your credit score, also known as your FICO score, is simply a number which represents your risk of defaulting on a loan.  The score is tied to the information found in your credit report, and the score measures your payment history, the length of your credit history, the amount of money you owe on credit, and the types of credit you have available.  All three of the credit agencies calculate your score, and, often, these calculations result in different scores.  If there is a substantial variation from one score to another, you should review your credit reports, comparing the information in each and dispute any inaccuracies.   

While you can get your credit report for free, you generally have to pay for your credit score.  Some credit card companies may provide you with your score as part of your membership.  The cost to obtain your credit score is generally under $10, and can be purchased from any one of the three credit reporting agencies.  As an alternative, you could use a FICO score calculator to estimate your score. 

FICO scores can range from 300 to 850, with 850 being the highest score given.  A score of 760 or better is considered to be the most desirable and referred to as great.  A score of 725 to 759 is considered to be very good.  A score of 660-724 is considered good/average.  Most mortgage companies require a score of at least 660 to consider you for a mortgage. 

There is a wealth of information available on how to improve your credit score, and you can search online for various tips and strategies.  But the bottom line is that information is power, and you should know your credit score and the information contained in your credit report.

Financially Fit in Five discussed credit reports in our last blog posting.  If you haven’t yet had the opportunity to read my last blog on Patch , “Getting your (free, no strings attached) credit report, “ it will give you an introduction to credit reports and credit scores and information which will supplement this blog posting.

If you have any questions or need any additional information, please feel free to contact me, Liz Crystal.  You can learn more about my company, the LC Group, at www.thelcgroup.net.