Along with your credit report, you can also request your credit score (also called FICO). There will be a charge to get your credit scores from each credit reporting agency but along with your credit report, this will be the tell tale sign as to your buying power. If you are given the choice of buying an all in one report which includes your credit report from all 3 agencies along with your credit scores, don’t choose that option. This type of report is usually more of a summarized report and won’t include all the information that you need to see on your credit report.
The way I see a credit score is that it is a number which not only predicts your potential buying power but also your risk. Some see it as your ability to make credit payments on time. This credit score is your number at a particular point in time and it can change at any moment.
What is considered a good credit score? So why does your credit score matter? Are you looking to purchase a car in the near future? Maybe just getting auto insurance to go along with that new car you are thinking about. Perhaps moving into an apartment or house shopping? What about that credit card application that just showed up in the mail at 1.9% for the first six months? Hey, that department store said that I could get 10% off my purchase today if I apply for their store credit card. I’m looking for a job and I wonder what my future employer thinks of me?
All of the above could be dependant on your credit score or what some call FICO (Fair Isaac Corporation). FICO scores range from 300-850, the higher the score the better or what is also considered to be a lower risk. FICO comes up with their score through a mathematical equation. Either the credit report itself and/or the FICO score is passed on to the lender when a request for credit is made on your behalf.
How do you rank?
FICO Credit Score Percent of People
With That Score 300 – 499 2% 500 – 549 5% 550 – 599 8% 600 – 649 12% 650 – 699 15% 700 – 749 18% 750 – 799 27% 800 – 850 13%
If you are considering a mortgage, although FHA says that you only need a 620+ credit score, 650 or above is considered adequate. Mortgage brokers and banks really like to see that FICO at 720 and above.
Generally, a FICO score below 700 entails some sort of risk. Your goal should be to get your score at 720 or above and keep it at that level.
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