Here are some things to consider when reviewing your credit score.
What Is A Credit Score? A credit score is a number that helps lenders and others predict how likely you are to make your credit payments on time. Each score is based on the information then in your credit report.
Why Do Your Scores Matter? Credit scores affect whether you can get credit and what you pay for credit cards, auto loans, mortgages and other kinds of credit. For most kinds of credit scores, higher scores mean you are more likely to be approved and pay a lower interest rate on new credit.
Lenders look at your scores all the time. They look at your scores when deciding, for example, whether to change your interest rate or credit limit on a credit card, or whether to send you an offer through the mail. Having good credit scores makes your financial dealings a lot easier and can save you money in lower interest rates. That's why they are a vital part of your financial health.
What is a Good Score? When lenders talk about "your score," they usually mean the FICO® score developed by Fair Isaac Corporation. It is today's most commonly used scoring system. FICO scores range from 300-850, and most people score in the 600s and 700s (higher FICO scores are better). Lenders buy your FICO score from three national credit reporting agencies (also called credit bureaus): Equifax, Experian and TransUnion.
In the eyes of most lenders, FICO credit scores above 700 are very good and a sign of good financial health. FICO scores below 600 indicate high risk to lenders and could lead lenders to charge you much higher rates or turn down your credit application.
Helpful Tips
When you get your credit scores, make sure you also learn the highest and lowest scores possible, as well as the most important factors that influenced your scores. These factors can give you an idea of how you can improve your scores.
Getting your own credit scores or credit reports won't affect your scores, as long as you order them from one of the sources we list here.
Review your credit reports for accuracy. Mistakes and omissions on your credit reports probably will affect your credit scores. If you spot an error, contact the credit reporting agency and the creditor whose information is wrong.
If you have questions or problems with your credit scores, contact the company that provided them to you.
Boosting Your Scores. Your credit scores change when new information is reported by your creditors. So your scores will improve over time when you manage your credit responsibly. Here are some general ways to improve your credit scores:
Pay your bills on time. Delinquent payments and collections can really hurt your score.
Keep balances low on credit cards. High debt levels can hurt your score.
Pay off debt rather than moving it between credit cards. The most effective way to improve your score in this area is to pay down your revolving credit.
Apply for and open new credit accounts only when you need them.
Check your credit report regularly for accuracy and contact the creditor and credit reporting agency to correct any errors.
If you have missed payments, get current and stay current. The longer you pay your bills on time, the better your score.