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Getting the Credit You Deserve

What’s a credit score?

You can’t understate the importance of your credit score – it’s a numerical representation of your creditworthiness. It can be a ticket to your biggest financial goals…or one of your biggest obstacles.

A credit score is a number that creditors use to assess the likelihood that consumers will repay their debts and make payments on time. The number is generated using a statistical model that takes information from your credit report. Making payments, obtaining new credit, and other activities can cause your score to fluctuate.

One of the most widely used providers of credit scores is Fair Isaac and Company, creator of the FICO scoring model. Other popular scoring models include TransUnion’s Empirica score, Experian’s VantageScore, Equifax’s Beacon score, and CreditXpert’s CreditXpert score. Each creditor and lender has a different corporate policy on risk levels. Lenders and credit experts do agree, however, that paying your bills on time, as agreed, and never taking on more debt than you can afford are all good ways to positively impact your score.

What’s a good credit score?

Fico credit scores range from 300 to 850.

Below 599: Bad

600-649: Poor

650-699: Fair

700-749: Good

750+: Excellent

It’s important to remember that all lenders consider your credit score differently, depending on their company policies. A score that may be considered “fair” for the purposes of one creditor may be viewed as “good” for the purposes of another.

How is a score calculated?

Each company that produced a score uses different criteria; for example, Fair Isaac and Company (FICO), creators of the most commonly used scoring model, weighs the information as follows:

Payment history: 35%

Type of credit in use: 10%

Amount of new credit: 10%

Length of credit history: 15%

Amount owed to all creditors: 30%

Scores typically range from the 300s to the 800s. Lenders equate higher scores with lower credit risk. A credit score is a “snapshot” of your risk at the time you request credit and is generated based on the information in your credit report at that moment. Your score may be different from one credit reporting agency to the next because your credit history may be different at each of those agencies.

Even if all lenders used the same score, each lending institution has its own criteria for approving loans. One creditor may extend you credit witha score of 675 while another lender may deny you credit based on the samescore. The score may affect the type or amount of credit or the interest rate thata lender offers you.

The fastest ways to hurt your credit score:

Closing old accounts

Opening too many new accounts

Maxing out your accounts

Defaulting on debts

Settling your debts

Filing bankruptcy

Missing payments


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