8. What is a credit score and how does it help me?
Your credit score is what lenders use to determine whether or not toextend you credit. A number too low and you will not get credit. A number that is average and you will get a high interest rate. A good score and youwill get credit at a decent interest rate.
9. Having a good credit score will save you thousands of dollars!
Because you will be extended credit with the best interest rate, you willsave tens of thousands of dollars on home mortgages and thousands of dollars on interest on auto loans and credit cards.10.
So what is a good credit score?
Below 620 Poor Credit (in other words - hurting!)620-660 You will be extended Sub-Prime financing. Still, ouch!660-720 This is Average, but you will still be assessed higher rates.720-750 This is Excellent. We all aspire to this.750 + Champaign pours from the heavens. Perfect Score.
What is a FICO score and why is that important?
There are many scores out there. A score is basically compiled from goodand bad information from your credit report. The FICO score is a scorecompiled from software created by the Fair Isaac Corporation. Each of the major credit reporting agencies provides a FICO score. This FICOscore is what is used by most lenders. All other scores attempt tosimulate what your FICO score might be.
12. Who is the Fair Isaac Corporation?
The Fair Isaac Corporation is the developer of the FICO score. Becauseeach of the big credit reporting agencies is slightly different in the way theypresent your credit report, a different credit scoring program was writtenfor each. Each credit reporting agency then will have it's own FICO scorerepresenting your credit. Since a lender may pull your credit score fromonly one reporting agency or a combination of scores, it's advisable for you to find out what your score is at each credit reporting agency.
What are the 3 big credit reporting agencies?
The 3 national credit bureaus are Experian, Equifax and TransUnion.
Myth: Closing old accounts will improve my credit score.
This depends. Old accounts typically have credit history associated withthem, so removing them removes the history. Any negative itemsassociated with that account will not be removed. Most likely this will havean adverse affect on your score. One possibility where it might help is if you have too many credit cards. Choose wisely which accounts to delete.
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