What Is A Credit Score?
We now know why a good credit score is important. So what is a credit score?
First let's clear up the terminology. You will often hear credit scores referred to as FICO scores.
What Does FICO Stand For?
A company call Fair, Isaac and Company developed the credit score rating formula that all credit bureaus and lenders use. The credit score is now commonly referred to as the FICO score (from Fair, Isaac & Company) and the two terms are interchangeable.
Your credit score or FICO score is not a single number. There are 3 major credit bureaus that provide credit scores. The credit score from each can be slightly different.
Here is an outline of the basis for determining your credit score or FICO score. Each number represents the percentage of that information that makes up your credit score.
35% is based on your payment history -
30% is based on the amounts you owe -
15% is based on the length of your credit history -
10% is based on how much new credit you have requested -
10% is based on the types of credit you use -
So What is a Credit Score And When Is It Considered Good?
FICO scores range from about 300 to 900.
In general, the higher the score, the lower the credit risk. Because lenders have somewhat different standards for how much risk they will accept, a credit score that is considered acceptable by one lender may not be accepted by another.
What is a good credit score? According to Craig Watts, Fair Isaac's spokesperson "The very best rates go to people with scores above 770, but a score of 700 is considered good".
The average score is somewhere around 725.
What is a credit score and when is it considered 'good' according to E-loan, a major online loan company? Here is their credit score scale.
FICO Score Chart
You may want to let a law firm remove the negative items from your Credit Report and help you raise your FICO score. Lexington Law has been a trusted leader in credit repair since 1991.
What is a Credit Score?
Suze Orman says:
More About Credit Scores ...
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FRONTLINE® and The New York Times joined forces to investigate the credit card industry. This report uncovers the techniques used by the credit card companies to earn record profits and get consumers to take on and carry more credit card debt. View and listen to "Secret History of The Credit Card" online here.