Your credit score is arguably one of the most important numbers in your life because of how often it is used. If you are applying for financing of any sort, be it a car loan, home loan or credit line then your credit scores are checked to determine whether you qualify for the loan and what your rates will be. Credit scores are also used by employers to see if a potential employee is trustworthy and responsible. The easy access to FICO data has made the use of the scores quite common in recent years. Read on to learn more about what a credit score is, what it means and how you can see yours.
What is a Credit Score?
A credit score (also known as a FICO score) is meant to be a numeric representation of your credit and the risk that you present to a lender. FICO scoring is a system developed by the Fair Issac company that takes in to consideration several aspects of your credit history and returns a score based on your current credit health.
The exact algorithms used to compute a FICO score is well guarded by it's creators, but we do know what general information makes up your score. The most important factor is whether you are current on your accounts or have had missed or late payments. Your total credit line and outstanding balances are another aspect of your credit score. The length of time you have had credit is also part of the equation as well as the types of credit you have had.
It is important to note that there are 3 different credit bureaus and they often have different data on the same person. It is possible for you to have three different credit scores, one for each bureau. In cases like this, a lender will usually look at the average of the three to determine if you qualify for credit.
What Do They Mean?
730+ – Excellent credit
700 – 729 – Good credit
670 – 699 – Average Credit
585 – 669 – Higher risk
Below 585 – Very High Risk
If you fall in to one of the top two tiers, you should be able to obtain the credit you desire and at good rates. People in the average bracket typically get the credit, but pay slightly higher rates. Those in the last two brackets may find it hard to get a loan and if they do get the loan, they will pay higher (sometimes even much higher) rates as well.
How Can I See My Credit Scores For Free?
The quickest and easiest way to get free credit report scores is to use the services of one of the many free credit report websites. Just know that not all services provide you with the same information. Some sites report data from all 3 bureaus while others only supply information from one bureau. The same goes for the FICO scores themselves. Different sites provide different services and getting data from all 3 bureaus is considered ideal.