10 facts about credit scores you should know

Probably all adults in the United States have at least encountered the term “credit score”. Quite a big part of your life depends on this three-digit number. For instance, a successful purchase of a new house, car or being accepted in a new job may be a result of your previous financial decisions and actions influencing your credit score. That is why, the more you know in this area, the better.

Fact 1

There is more to it than FICO. It means that more organizations deal with analyzing your financial actions. Still, it is FICO which is considered the “king” of the scores and in 90% of cases, lenders’ decisions are based on FICO. The next significant one is VantageScore.

Fact 2

You can get a few versions of your FICO score. Three of them are most significant. Experian, Equifax and TransUnion are the credit bureaus which give the potential lenders an insight into your finances. The three scores can vary a bit and you can be never sure if your lenders will check one or all three. Just in case, you can pay slightly more and monitor all.

Fact 3

Not only a loan depends on your score. Insurance or cellphone companies, employers or even landlords can check your score before doing business with you, so as to learn if you are worth their trust. It, actually, provides a good picture of you.

Fact 4

You can check your credit for free. The website annualcreditreport.com provides the credit reports for everyone every year. You can also subscribe to a special service which enables you to have more frequent insight into your situation seen from the formal side.

Fact 5

According to the FICO score range, good credit scores start at 690. 720 and above means the excellent result. In fact, it depends on what you need the score for, because the notion “good score” can vary.

Fact 6

People with better scores pay less. Good score guarantees more offers and, what is more, the better ones. It is best seen on the example of the mortgage interest rates which are lower for those with higher scores.

Fact 7

Bad credit now does not mean the end of everything. The older the bad item on your credit report, the less important it becomes. Especially when you try to make up for your bad decisions and behavior, it systematically loses the power of its impact.

Understanding your Credit Score | by Wall Street Survivor

Fact 8

A small credit card balance turns out to be healing for your dropping score. The credit utilization should not be high, but no balance at all will not do your score good as well.

Fact 9

There is some information which does not influence your credit score. These are the obvious: place of living, age, race, religion, marital status or sex, and also some concerning your finances like: salary, profession, employment history, interests on debts, child obligations, participation in credit or financial counseling.

Fact 10

Surprisingly or not, lots of people do not have a score. If you want to have it you should open an account and use your credit.

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