All You Need to Know About Credit Score

A credit score is a number lenders use to help them decide: “If I give this person a loan or credit card, how likely is it that I will get paid back on time?” A score is a snapshot of your credit risk picture at a particular point in time. There are many types of credit scores, but the most commonly used are credit bureau scores. Credit bureau scores are based solely on information in consumer credit reports maintained at one of the credit reporting agencies. Other types of scores may also include information from credit applications or bank files. The most widely used credit bureau scores are developed by Fair, Isaac and Company. These are known as FICO scores.

How does credit scoring help me?

Credit scores give lenders a fast, objective measurement of your credit risk. Before the use of scoring, the credit granting process could be slow, inconsistent and unfairly biased. Credit scores have made big improvements in the credit process. Because of credit scores:

— People can get loans faster
— More credit is available
— Credit decisions are fairer
— Credit rates are lower overall

What is a good FICO score to get?

Since there's no one “score cutoff” used by all lenders, it's hard to say what a good score is outside the context of a particular lending decision. For example, a FICO score of 750 may qualify you for a platinum credit card, whereas a score of 675 may indicate you're a better match for a standard card. Your lender may be able to give you guidance on the criteria for a given credit product.

How can I find out my FICO score?
You can now purchase your own FICO score at two different sites on the Internet. Go to www.myFICO.com or www.equifax.com to access Score PowerTM, a service brought to you by Fair, Isaac and Equifax. You'll receive your current FICO score, your Equifax credit report, a full explanation of your score, and advice for improving your score over time.

Some lenders also may tell you your score, if they are using it to make a lending decision. In California, state law requires lenders to tell you your score if they use it in connection with your mortgage application. In all 50 states, if you are turned down for credit based primarily on your score, the lender does need to give you the reasons why your score wasn't high enough to qualify. This can help you understand your credit picture and how to improve it.

Note that FICO scores are also called BEACON