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Finding Your Own Credit Score
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You would think that finding out what your credit score is would be
easy. In a way it is, but only because I’ve done my research and
you won’t have to spend time surfing websites looking for the ever
elusive credit number. It would seem logical to have your credit
score appear right on your credit report, but that’s just not the
way it is.
At one time, your credit score was a big secret known only to
financial companies and banks. With the FACT Act, legislators
decided that it was important for individuals to know not only what
their personal credit scores are but how they are calculated and how
to improve them.
The main company who calculates your credit score is the Field,
Isaac Company commonly known as FICO. They invented the concept of
the FICO scores so they are the ones who are known as experts in the
industry. Before we go into finding your score, let’s look at a few
facts about the FICO score.
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FICO scores are your credit rating
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They range from 300-850, higher is better
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Most lenders base approval on them
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Higher scores mean lower interest rates
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FICO
scores are calculated based on your rating in five general
categories:
-
Field, Isaac Company is the inventor of the FICO score
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They have the only website offering all 3 of your FICO scores
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The median FICO score in the U.S. is 723
Essentially, your credit score is simply a snapshot of your credit
use -- it's the Cliffs Notes version of seven years of your
borrowing history. In many lending situations, the lender bases its
decision almost solely on your credit score. Consider your credit
score the overall GPA of your borrowing history.
Now, here’s the bad news. If you want to know your actual credit
score, you will usually have to purchase it. This can be done in a
few ways.
You can get it from one of the three major credit reporting
companies: Equifax, Experian, and TransUnion. The fee isn’t a huge
one – usually around $15 or $20. However, if you’re serious about
growing your credit score, it’s well worth the money to be
financially responsible in the end.
You can also go to www.myfico.com and get your FICO score directly
from them. They will offer you a free 30 day trial membership which
will get your credit score right now and then, if you wish to
continue the membership, it will update the score as it rises (or,
heaven forbid lowers).
If you are applying for a mortgage, here’s a little good news for
you. You can find out your credit score for free! The mortgage
company will base their decision and interest rate on what your
credit score number is, so just ask and they’ll tell you!
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FICO scores
range between 300 and 850. Here’s what those scores mean:
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Over
750
– you have excellent credit and will be able obtain credit
easily
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720 or
more
– you still have very good credit and will be able to obtain
credit easily
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660 to
720
– this is an acceptable credit. You can still get loans, but
you may pay a higher interest rate
-
620 to
660
– creditors are going to be uncertain about lending you money
-
Less
than 620
– you have poor credit history and will probably not be able to
obtain credit on your own.
Knowing the above information makes it obvious that if you need or
want to get credit for something, the higher your score is, the
better your chances are to not only get credit but get it at a
handsome interest rate. If you are in the 660 to 620 range, you may
still get a loan, but the interest rate is likely to be higher.
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