The Highs and Lows Of Your Credit Score
Article by Susanna Berlatsky
Whenever you get new credit, regardless of if it is you applying for a credit card or trying to obtain a mortgage loan, the most critical factor that will decide if you end up with the loan is your credit score. And, even, if you manage to get the loan, your credit score will have a great influence on the terms of the contract.
Your credit score, also known as your FICO score, is a single number that assesses your overall credit risk. The reason that it is a number is because a number is easy for anyone to take in at a glance and understand. This single number combines all of the various factors that go into determining your credit worthiness. So instead of spending a lot of time looking through the various entries in your credit report, in most instances, a quick look at your credit score will tell the lender all he needs to know to make a lending decison on you.
The range of credit scores varies from credit company to company. The normal range is from 300 to about 850. The higher the credit score, the better it is for you. Higher scores also give you more choices when it comes to obtaining credit. The credit score is referred to, in the business by other names as well. For example, FICO scores and Empirica scores are synonymous.
The credit score is not something that’s been around forever. In fact, seeming as how it has only been popular since about 1995, it is a relatively new way of determining someone’s credit worthiness. But now, in a relatively short time, almost every financial institution in the country makes use of them in some form or other. In addition, they are used by the marketing departments of various financial institutions to determine who they should send out their various credit offerings.
Finding out your credit score is simple. You simply contact the various credit reporting agencies and ask for your credit report. Each company is compelled, by law, to provide to you, free of charge, one copy of their credit report per year. On the other hand, the law does not demand that he credit reporting company provide you with your credit score when it sends you your credit report. Some, however, will give it to your for free. Others will charge you a small amount.
If the company does charge you, it will only be a nominal charge. And, knowing their credit score is something that every consumer should know. If you don’t know your credit score, you are proceeding blindly, whenever you enter into a financial situation.
Since each credit reporting agency has its own methodology of determining credit scores, your score won’t be the same from each company. In addition, each credit reporting company doesn’t necessarily possess the exact same credit related information about you in their files. But, even if the scores don’t match exactly, they should be in the same ballpark.
If you have a credit score near 700 or so, you fall pretty much squarely into the average range of most Americans. On the other hand, if your score is under 500, you have some serious work ahead of you to raise your credit score up to an optimum level.
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