You would think that finding out what your credit score is would be easy.  It would seem logical to have your credit score appear right on your credit report, but that’s just not the way it is.

At one time, your credit score was a big secret known only to financial companies and banks.  With the FACT Act, legislators decided that it was important for individuals to know not only what their personal credit scores are but how they are calculated and how to improve them.

The main company who calculates your credit score is the Field, Isaac Company commonly known as FICO.  They invented the concept of the FICO scores so they are the ones who are known as experts in the industry.  Before we go into finding your score, let’s look at a few facts about the FICO score.

FICO scores are your credit rating:

  • They range from 300-850, higher is better
  • Most lenders base approval on them
  • Higher scores mean lower interest rates

FICO scores are calculated based on your rating in five general categories:

  • Payment history – 35%
  • Amounts owed – 30%
  • Length of credit history – 15%
  • New credit – 10%
  • Types of credit used – 10%

Field, Isaac Company is the inventor of the FICO score
They have the only website offering all 3 of your FICO scores
The median FICO score in the U.S. is 723

How To Read Your Credit Score

FICO scores range between 300 and 850.  Here’s what those scores mean:

Over 750 – you have excellent credit and will be able obtain credit easily

720 or more – you still have very good credit and will be able to obtain credit easily

660 to 720 – this is an acceptable credit.  You can still get loans, but you may pay a higher interest rate

620 to 660 – creditors are going to be uncertain about lending you money

Less than 620 – you have poor credit history and will probably not be able to obtain credit on your own.

Knowing the above information makes it obvious that if you need or want to get credit for something, the higher your score is, the better your chances are to not only get credit but get it at a handsome interest rate.  If you are in the 660 to 620 range, you may still get a loan, but the interest rate is likely to be higher.

That’s why it’s important to keep your credit good or establish good credit from the get go.

Filed under: How To Read Credit Reports