Your FICO score is a numerical score based on your financial history, as collected in your credit report. Creditors can use this credit score number to evaluate whether or not they believe you are able to pay a loan back on time.The higher your credit score, the more likely you are to pay off a loan on time and the less of a credit risk you pose. In this case your lender may offer a lower interest rate, saving you hundreds of dollars on an auto loan and many thousands of dollars on a home loan.
- 760-850 The best score range
- 700-759 Able to obtain favorable financing terms
- 660-699 Decent score range
- 620-659 May have unfavorable terms
- 580-619 May have trouble obtaining credit
- 300-559 Time to get help!
Payment History
Your payment history contains information on credit cards, retail accounts, installment loans, finance company accounts and any mortgages you may have had. It also details any past due accounts and the amount owed on them. You will also find bankruptcy information as well as other adverse information in regards to your credit history.
Amounts Owed
Your amount owed is the amount owed on any accounts you currently have and number of accounts with balances. Note that it has a large impact (30%) on your credit score. You should try to pay down all open lines of credit to under 30% of the available credit on each account that you have.
Length of Credit History
The length of your credit history details when credit accounts were opened and the last activity on those accounts.
New Credit
New credit shows the number of recently opened accounts by the type of account and number of account inquiries.
Types of Credit
The type of credit used is a snapshot of what types of financing you have held.
Taking Control of Your Credit
The Big 3
There are three major credit-reporting agencies: Equifax, Experian and TransUnion. Each of these credit bureaus maintains their information separately, which can cause the financial data to be slightly different among the three of them. Most experts agree that in order to get the best snapshot of your financial history and credit worthiness, it’s a good idea to request a report from each of the three reporting agencies.
If you find problems on your credit report, the credit bureau’s will work with you to correct the error. Also, be sure to place fraud alerts on your credit agency account to protect yourself from any kind of identity fraud. Be careful: each agency will try to “upsell” you into additional paid services.
1 (800) 685-1111
Equifax Credit Information Service
P.O. Box 740241
Atlanta, GA 30374-0241
1 (800) 888-4213
TransUnion, LLC
P.O. Box 1000
Chester, PA 19016
1 (888) 397-3742
Experian
P.O. Box 4500
Allen, TX 75013
Get Your Free Credit Report
It’s highly recommended that you review your credit report once a year, so you can identify and correct any errors before they create a problem when applying for credit. Changes in the law now allow consumers to receive their credit report for free once per year so they can identify these errors.
Failure to monitor your FICO score can lead to problems down the road when you apply for credit.