What is Your Credit Score and Why is it So Important?
AdsIf have a credit card or if you've ever applied for a loan, purchased an automobile, or tried to buy a home, it's likely that you've heard of FICO. FICO stands for Fair Isaac Corporation. It's a company that began in the 1950s and was founded by Bill Fair, an engineer by trade, and Earl Isaac, who was a mathematician.
They created their initial credit rating system in 1956. Since then FICO has developed more and more complex credit scoring software that is used to predict how credit worthy a person is. It affects you directly because the systems "says" that the lower your score, the more likely it is that you will default on a loan. Hence, whomever is considering lending you money will charge you higher interest rates to compensate for that possibility.
When financial companies consider whether or not to offer a person a loan most go to one of the three major credit reporting agencies to get a credit score - either Experian, Equifax, or TransUnion.
Credit scores range from 300 to 850. Most people in the United States have a credit score from 600 into the 700s. Because of recent tightening of credit, you will often need a credit rating of 700 points or more in order to be approved for a mortgage. And generally no matter what you want to buy, the higher the number the less you will pay in interest.
Did you know that by law you are entitled to receive a free copy of your credit report every 12 months
Furthermore, the Federal Government authorizes only one site to do this.
source: Mike Irons