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Credit Scoring

Playlist: Credit Scoring

What is a credit score?

What is a credit score?

Your credit score is a number assigned to you based on detailed information in your credit history that lets a lender know your creditworthiness or your ability and likelihood to repay a debt or loan.

Your credit score is primarily developed by using either a FICO or VantageScore model.

Most credit scores are developed using the FICO Score method.

Your score can range from 300 to 850.

The higher the number, the less risk to the lender.

Your credit score is one of the most important financial indicators needed to be able to borrow an auto or mortgage loan and make other financial decisions.

Multiple factors make up your credit score such as the amount of available credit you have, if you pay your creditors or bills on time, your debt to income ratio, etc.

Your credit score is the primary factor to determine whether or not you will be eligible for a loan, including a private student loan, or credit card.

If approved, your credit score will also impact the interest rate and terms of the loan or credit card.

Other entities such as insurance companies or landlords may also use your credit score when considering rates or approving rental applications.

It is important to maintain a good credit score.

Having a good credit score will enable you to purchase a home or car at a favorable interest rate.

There are various ways to check your credit score for free.

Here are a few options to obtain your free credit score:

● If you have a credit card, you can often get your credit score from your credit card company.

● If you apply for a loan (car, mortgage, etc.), you can request your credit score from the lender.

● Check with your bank; they may offer a free credit score.

Your credit score never resets.

It is important to build and maintain good habits by paying bills on time and managing your debt responsibly.

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