Do you know your credit score?
Ask most people if they know their credit score and you will get a resounding – “NO”. If you have not pulled your credit report and score in the last year, you probably should. Last year, creditors, insurance companies and potential employers purchased over 10 billion scores. That’s 43 per person per year (>18 years old) based on 2010 census information. Understanding what a good credit score is requires understanding how the scores are calculated. Credit scores are 3 digit numbers that are calculated according to a mathematical formula with the information in your credit report and how it compares to millions of other people. The number predicts how likely, or unlikely, it is that you will pay your bills. There are three different credit scoring models most often used by lenders to decide whether or not to extend an individual credit, but the most commonly used credit score is the FICO score. A creditor may pull your score to evaluate you for a credit application or to evaluate whether to increase or decrease your credit lines. An insurance company may pull your credit score to determine how much to charge you for car insurance. A potential employer may pull your credit score before offering you employment. Sounds pretty important, right? It is. That’s why it is so important to review your report for accuracy and keep track of your credit score. By Federal law you are allowed to obtain your credit report once per year for free. Some people think requesting their credit report will affect their credit score, it does not. One of the best sites to go to according many experts is www.annualcreditreport.com. Also, you may obtain your credit score from FICO. FICO stands for The Fair Isaac Company and it invented credit scores. You can obtain your FICO score at www.myfico.com(WARNING: FEES MAY APPLY). So, the first step in having good credit is knowing what your creditors and potential employers already know.
Credit Score Chart & Range: (FICO)
- 499 or Less (2% of Population) Horrible
- 500-549 (5% of Population) Worst
- 550-599 (8% of Population) Bad
- 600-649 (12% of Population) Poor
- 650-699 (15% of Population) Okay
- 700-749 (18% of Population) Great
- 750-799 (27% of Population) Excellent
- 800 or more (13% of Population) Best
You can raise your score in as little as 4 to 6 months by following these principles:
- You can quickly raise your score by Paying Down Balances (some experts believe to keep your balance at about fifty-percent of your limit).
- Another way to boost your score is to Pay On Time (which will have the biggest impact).
There is a great site that provides regularly updated information on credit and credit related issues. It’s www.videocreditscore.com.