Many people have a problem
understanding what their credit score is, and if they do
know the number, they may not know for sure whether it is
actually a good credit score or a bad one. Settling this
issue shouldn't be that hard.
A quick look at numbers will
get you started on understanding more about credit scores
and what they mean. A number in the 800s is excellent, but
only 11 people out of 100 will have a score that high.
Twenty-eight percent qualify for credit scores between 750
and 799, while another 19 percent have a credit score above
700 but below 750. The rest of the population that has a
score that falls in the area below 700. (This information is
available from a company called Fair Isaac, which compiles
credit numbers used by many who lend money and extend
credit.)
Why should you be concerned
about this good credit score? It could mean the difference
between a very good rate on your loan and a rate that is
higher, costing you more over the life of the loan. As one
example, scores in the high 700s and above 800 could get you
a loan rate of about 6 percent, while a number in the low
600s might mean you will pay almost 8 percent as an interest
rate on the loan.
For most purposes, there
are three companies that issue credit reports used by many
creditors and lenders. These are Equifax, TransUnion and
Experian. While it might seem that a good credit score with
one company would be the same with another company, the
truth is the score can vary from one agency to another.
These companies report based on the information they have,
so if Equifax, for example, does not have some information
that Experian does, your score could be different at each
office. This is why you should check your credit information
regularly, at least once each year, to make sure the
information is correct.
Individuals can contact
each credit bureau or get a combined report with three
scores and reported information. The combined report from
FICO (a division of Fair Isaac mentioned earlier) should
also include some ideas on how to raise your credit score.
Here are some great reasons to keeping your good credit
score or working to get it above the median score of 723:
additional benefits with credit cards; lower loan rates;
better career opportunities; more choices when it comes to
buying things you want and need.
