What is Credit Score / FICO Score?

 

What is Credit Score?

A credit score is a number that indicates your creditworthiness. The most commonly used type of credit score is a FICO Score, which was developed by the Fair Isaac Corporation. It gives you a score between 300 and 850.

Who decides my credit score?

The three credit bureaus – Equifax, Experian, and TransUnion – usually calculate your credit score.

How is a credit score calculated?

Your credit score is calculated based on the information contained in your credit report, like whether you make the payments on time, how much of the available credit limit you are using, etc. Each credit bureau has a slightly different formula to calculate credit scores, so your credit scores from different credit bureaus can vary a little.

Why is credit score important?

When you apply for a loan or a credit card, the bank or financial institution usually checks your credit score. Your credit score can decide whether you get the loan or not, and at what rate. A good credit score gives the lender confidence that you would pay them back on time, and therefore helps you get credit cards and loans at a lower rate.

What is considered a good credit score?

Generally speaking, a credit score of 700 or more is considered good, and a credit score of 800 or more is considered excellent. The average credit score in the United States is in the high 600’s

Can I do anything to increase my credit score?

It’s definitely possible to improve your credit score, and I’m glad you want to. But how that’s done is a topic for another time…

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