Credit Score Ratings

People are more familiar with the term “credit score ratings” than they once were because of the various commercials that mention it, but they are not really secure in the knowledge of exactly what these credit score ratings are, or just how having a high or a low rating can affect them.

Credit score ratings come from the three credit reporting agencies, Experian, Equifax, and Trans Union, the same agencies where you get your credit report. These agencies have a special type of software that takes the information from your credit report and compiles a score from it. This is called a FICO score.

The software uses several different types of information from your credit report in order to figure out what your FICO score is. The names and addresses of your creditors, the total amount of money you owe to all of your creditors, and your payment history with all of them are all what makes your score a good one or a bad one.

A FICO score is used by any business establishment where you might apply for credit, so it is useful to know what your score is before you apply. FICO scores range from 300, which is not good, to 850, which is very good. Each credit agency might give you a different score, so check with all three to get a good idea of exactly what your score is.  You can get a free credit report online, but they are most definitely free! You do not have to sign up for any type of service to get a free credit report. You can get one free credit report from each of the three credit reporting agencies once a year.

All of those commercials who tell you how important your credit score rating is are very correct.  Most people know that their credit is going to be checked when they apply for a credit card, an automobile loan, or a mortgage. Those are the three “big ones”, and a low credit score will cause you to pay a high interest rate.

Automobile loans and home mortgages may require you to get a co-signer.

Your credit score ratings can also influence other things that are important to you. If you are looking for a new job, your potential employer could well check your credit rating before hiring you, especially if the job is one where you handle money. Landlords will check these scores to try to weed out undesirable tenants. You can still rent with bad credit, but you may be asked to pay a big deposit. The utility services for your home such as water, electricity, and gas may also charge a large deposit to someone with a low credit score who needs these utilities turned on at a new address.

Your home and auto insurance companies also take the time to check your credit score ratings. A low rating may well cause your premiums to be higher. Even your cell phone service can be affected by a low credit rating. If you have poor credit, you’ll pay more for your cell phone service.

Take care of your credit score rating, for it can make the difference between being able to purchase goods and services and having to pay a premium price for them – or perhaps not getting them at all.

Recent additions:

• FICO 08
• Is It Time For Credit Counseling?
• Federal Credit Bureau?
• Credit Reporting Agencies – The Basics
• Credit Repair Basics – Some Useful Tips
• Divorce And Credit

Related Articles

• Getting a Free Credit Report
There are some pretty funny commercials on television for free credit reports. You'll also run across offers for free credit reports in newspapers and magazines
• Have Your Say With Credit Cards
The Federal Reserve is offering consumers a chance to have their voices heard about credit card practices. Now through August 4 consumers are able to
• Credit Reforms May Be Underway
Due to a large concern of harassment and predatory behavior against consumers, the Federal Government has decided to look into the matter of addressing credit
• What Exactly Are Finance Charges
If you have a credit card, you probably know all about the various fees and charges that may be assessed to your account balance throughout
• Credit Or Debit: The Differences
In the past when you wanted to make a purchase, all you had to do was write a check or perhaps use a credit card