What Does Your Credit Score Mean?

Your credit score is a 3 digit number that is assigned as a convenient way for lenders to understand how credit worthy you are.  It is often used to help them decide whether you qualify for credit and what the associated interest rate will be.

Anytime you apply for credit, your lender is likely to request a copy of your credit report which includes lots of information about your current credit standing.  It will also include the numeric credit score.  Since lenders can easily get their hands on this information, it is beneficial to you if you review the details yourself from time to time.

There are three companies that generate credit scores:  Equifax, TransUnion, and Experian.  They generate a number between 300 and 850.  This number is often called the FICO score, which stands for Fair Isaac Corporation.

Here is a quick breakdown of the FICO score values:

•  720-850 – this is the range of average scores and better, a very good range
•  700-719 – rates may not be as good as above, but your credit is still decent
•  675-699 – at this level you are starting to lose out on the best deals
•  620-674 – you cannot get great terms here as loans will cost you extra
•  560-619 – this is really subprime so you’ll have to work to improve
•  500-559 – it’s going to be tough to get any loan

You can find another analysis of the numbers on our credit score rating scale page.

Among the factors that determine your score include your own credit history, the amounts you owed, how much remains, the duration of credit history, and the type of credit you have used.

You can improve your score by paying down any debts, staying well under your credit limit, and pay all bills before due dates.

Explore other resources on this website to learn more about your credit score and how to improve it.

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