What Credit Score Means

Your credit score refers to the 3 digit number assigned to consumers as a convenient way for lenders to understand how credit worthy a certain person is.  It is typically utilized in order to help these lenders decide whether you qualify for credit and what the associated interest rate will be.

When you apply for credit, your lender will probably request a copy of your credit report. This report will include a lot of information about your current credit standing.  It also covers the numeric credit score.  Given that lenders can easily get this information, it will be best on your part 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 also known as 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

Included in the 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 utilized.

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

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

Find More Credit Score Articles