What is My Credit Score?

Are you in need of a loan, but you have been told that your credit score wasn't high enough?

You're probably wondering "what is my credit score"?

A credit rating is your financial history and the credit score is a summary of that history that represents your credit worthiness.

An analogy could be the grades A - F that you receive on tests that you take. If you receive an 'A' on the test tells everyone with 'one' easy to understand term, an 'A', that you did well.

Banks and credit card companies use this score to determine the risk involved in lending you money or extending you credit and insurance companies may base your premium on it and potential employers often use it to assess your character and they may base their hiring decisions on it.

So "what is my credit score" your ask?

Your credit history and score reflects hundreds of parameters in one's financial history.

These hundred of variables are included in your credit and the calculation of your credit score, but I only mentioned the bigger ones here.

* Just paying your bills on time, as important as that is, may not rescue you from other credit pitfalls.

* Bills, mortgages, your monthly rent, credit cards, long overdue or overlooked, can show up as a blotch on your credit.

* A cable, or credit card bill, that didn't make it to your new address, or you mail them your payment, but it gets lost in the mail. It may be the store, credit card company, or post offices the error,....... but it is YOUR credit that gets hurt.

* The amount of unpaid credit cards, even if they're never late. The more you owe the less credit worthy you are.

* The amount of credit you already have. It's not always the More, the Merrier.

* The kinds of credit cards you have, some are good believe it or not. Visa, MC, AMEX, Discover, etc. are considered good credit; others may affect your credit negatively. Such as credit extended to you at a store, or the mall when you go out and buy appliances, etc.

Cancel and make sure you get rid of the bad credit as quickly as you can.

* Unpaid medical services.

* Collections.

The amount may, or may not, matter.

Scores of 700-850 = a smooth loan process and the best interest rates

Scores of 550-699 = medium risk to the lender and you get higher interest rates as a result.

Scores of 300-549 mean "sorry, no loans or credit cards".

The important thing to know is that credit scores aren't an exact science and these are only some of the variables.

Besides affecting the kind of loan you are able to get your past credit history will also tell them how to treat your account if it has already gone into default.

There are several types of credit scores, but the most widely used in the United States is the FICO score.

FICO stands for Fair Isaac Corporation. This company developed the mathematical formula that is used to calculate your credit score.

This score is one of the most important factors in determining your credit worthiness in the United States. How do you know if your credit score is good enough? You can access your credit scores online at the FICO website.

It will only cost you about $30 - 45 to access a tri-merged credit report. You'll be ahead of the game by knowing this information before you apply for any loan.