Credit scores affect whether or not you can get credit and the interest rate you pay for credit cards, auto loans and mortgages as well as other kinds of credit. A credit report contains information on where you live, how you pay your bills, and whether you have ever been sued, arrested, or filed for bankruptcy. Nationwide consumer reporting companies sell the information in your report to creditors, employers, insurers, and other businesses that use it to evaluate your applications for credit, insurance, employment or a mortgage. Normally a higher score means 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 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 makes your financial dealings easier and helps you save money with lower interest rates. A good credit score is a vital part of your financial health.
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. FICO credit scores above 700 are very good and are 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 to turn down your credit applications. Credit reports are important because they are the raw data that go into your credit score.
The federal Fair Credit Reporting ACT (FCRA) requires that U.S. consumers be entitled to a free credit report each year. The government’s goal is to make sure that consumers stay informed, fight identity theft, and get fair treatment.
The nation’s credit reporting agencies have teamed up to build a website that you may use to get your free credit report. You can also call them at 877-322-8228 to request your free credit report. Click here for more information and to make sure you are not requesting your credit score from an “imposter” website.