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A credit score is one of the most important financial tools you have, and it is the best way for lenders to know what you bring to the table as a borrower. Are you likely to pay your bills on time? Do you have a lot of debt? You want to pay close attention to this numerical representation of your credit history as you build your financial well-being.<\/p>\n\n

Introduction to Credit Scores<\/h2>\n\n
Your credit score is a number that typically ranges from 300 to 850, and the higher it is, the better. Lenders use your credit score to determine if they should lend to you and to determine what level of risk you are to them.<\/p>\n\n

What Is a Credit Score?<\/h2>\n\n
Credit scores are a type of predictive tool. Companies, like banks, credit unions, and credit card lenders, use them to predict what your borrowing behavior may be like down the road. It is based on the premise that people will follow the same types of credit patterns they have in the past in the future. A person with a history of making late payments in the past is more likely to make late payments in the future, for example.<\/p>\n\n
Credit scores stem from the data compiled in your credit report. Most people have three credit reports, one from each credit bureau, Transunion, Equifax, and Experian. These organizations collect your data from lenders, including credit card companies, mortgage, auto loan lenders, etc. Then, a numerical figure is calculated using that data. The more positive aspects of your credit report, the higher your credit score will be.<\/p>\n\n

Why Is a Credit Score Important?<\/h2>\n\n
Credit scores are critically important for many reasons. Most importantly, lenders use them to make lending decisions. Every time you want to borrow money to buy a home or car, open a new credit card, or consolidate your debts, it is your credit score that lenders will use to make that decision, at least in part.<\/p>\n\n
Credit scores are also important for other reasons. For example, if you want to rent an apartment, the landlord may use your credit score to provide insight into what type of tenant you will be. Some employers can use credit scores to determine if you are a safe choice for a job, and insurance companies can also use this information to determine how much risk you present to them.<\/p>\n\n
The higher your credit score, the better. It\u2019s not just because a higher score helps you qualify for a loan but also impacts the loan terms. For example, if you have an excellent credit score, you may be able to obtain a loan with a lower interest rate. That means you pay less to borrow money, which means you will save money in the long term when borrowing.<\/p>\n\n

Factors That Affect Credit Scores<\/h2>\n\n
As important as credit scores are, they do not stay the same over time. In many ways, you can change your credit score over time with good financial habits. The most essential factors in determining your credit score may include the following:<\/p>\n\n
\n\t
Whether you pay your bills on time<\/li>\n\t
The amount of debt you have<\/li>\n\t
The type of debt you have, such as secured and unsecured loans<\/li>\n\t
Recency and frequency of new credit applications<\/li>\n\t
How long you\u2019ve used credit<\/li>\n<\/ul>\n\n
How to Check Your Credit Score<\/h2>\n\n
You must use one of several methods to determine your credit score. Under U.S. law, you have the right to information about what is being reported about you by the credit bureaus. That is why you have access to a free copy of your credit report once every 12 months from each credit bureau. However, that report does not always offer your credit score.<\/p>\n\n
You also have multiple credit scores based on different algorithms and terms. If you want to learn your credit score, there are several places you can check.<\/p>\n\n
\n\t
Some credit card companies provide their customers with credit scores. You will be able to view yours when you log into your account.<\/li>\n\t
There are free services that offer credit score information. These may be accurate but could be less accurate than others.<\/li>\n\t
Some banks also give you access to your credit score at no charge.<\/li>\n<\/ul>\n\n
You do not want to pull multiple credit report copies, though. Do not apply for a loan to learn your score, as that can create a hard inquiry, a negative mark, on your credit report.<\/p>\n\n
How to Improve Your Credit Score<\/h2>\n\n
Your credit score is constantly changing, and that\u2019s a good thing. It means there\u2019s always room for improvement. Some ways you can work to improve your credit score include:<\/p>\n\n
\n\t
Make payments on time every single month. Set up automatic payments to make sure that happens.<\/li>\n\t
Don\u2019t apply for too many loans in a short amount of time. Aim for no more than one application every six months.<\/li>\n\t
Use credit but keep your credit card balances as low as possible.<\/li>\n\t
Use different types of credit, like secured car loans and unsecured credit cards.<\/li>\n\t
Keep your credit open. Avoid closing accounts, especially older ones.<\/li>\n<\/ul>\n\n
Building your credit score is a process that works over time. With consistency, you should be able to see your score rise over time.<\/p>\n"},"library":"H5P.AdvancedText 1.1","metadata":{"contentType":"Text","license":"U","title":"Untitled Text"},"subContentId":"9b514423-f04d-4593-be62-5c6b17178a03"}}]},"library":"H5P.Column 1.16","subContentId":"358377b5-1408-4f58-a0a3-75f87132d277","metadata":{"contentType":"Column","license":"U","title":"Credit Score Basics"}},{"params":{"content":[{"content":{"params":{"text":"
Credit scores are some of the most important financial numbers you have, but it is common for people to not know much about them. Do you know you have more than one credit score? Some lenders use one score, while others use another. Let's look at what these scores are and what they mean.<\/p>\n\n
What Is a Credit Score?<\/h2>\n\n
The term credit score refers to a numerical representation of your credit history. Lenders report your credit use to credit bureaus. Those bureaus create an extensive file on you that documents all of your use of credit over time. Then, other organizations take that information and produce a number from it. Numbers typically range from 300 to 850, and the higher your score is, the better you have managed your use of credit in the past.<\/p>\n\n
FICO Credit Scores<\/h2>\n\n
FICO is the most recognized credit scoring tool used today. It comes from the Fair Isaac Corp, which introduced this score in 1989, though it has changed many times since then. FICO is a specific brand of credit score. Many credit card companies and car lenders use FICO scores to decide on lending to consumers, and FICO scores are heavily used in the mortgage industry.<\/p>\n\n
You may have a good FICO score if your score is about 690. However, each lender determines what they believe is necessary to lend to or how much to charge.<\/p>\n\n
FICO scores are significant because they provide insight into how you've used credit in the past. Most lenders believe that past credit usage indicates how you will manage the credit they extend.<\/p>\n\n
Other Credit Scores<\/h2>\n\n
As noted, there are several other types of credit scores. They are different brands issued by various companies and organizations, and here's a look at some of them.<\/p>\n\n
VantageScore<\/h3>\n\n
The VantageScore is the second most common brand of credit score. It was first introduced in 2006 by the three credit bureaus and is considered a good tool for consumers and lenders. This credit scoring model incorporates the same types of information that FICO does but may put more value on one area than another.<\/p>\n\n
FICO scores typically require a person to have at least one account opened and reported to a credit bureau for at least six months before a score is generated. VantageScore can do the same within just one month of history.<\/p>\n\n
Many lending institutions use VantageScores, and the factors contributing to these scores are relatively the same as FICO.<\/p>\n\n
CreditXpert<\/h3>\n\n
You may hear a bit about CreditXpert, a predictive credit scoring tool that provides mortgage lenders with financial information about borrowers' qualifications. This credit score focuses more on determining whether a borrower will likely pay their mortgage payments on time.<\/p>\n\n
CE Score<\/h3>\n\n
Yet another version is a CE score, which has a higher minimum credit score of 350. This credit score puts less of a positive spin on payment history. For example, with FICO, your payment history accounts for as much as 35% of your credit score, and with CE Score, that's just 20%. Credit history is also less important, accounting for just 5% of your score compared to 15% of your FICO score.<\/p>\n\n
CE Score is based on data from just Experian, one of the three credit bureaus. Currently, CE Score is not widely used by lenders and does not share as much information as other credit reporting tools.<\/p>\n\n
Experian Credit Score<\/h3>\n\n
The Experian credit score is focused on the data reported to Experian rather than any other credit bureau. Remember that each credit bureau collects different data, and some lenders may not report to all of them. That's why the data from this credit report could be different than others.<\/p>\n\n
Pros and Cons of FICO and Other Credit Scores<\/h2>\n\n
When using any credit score, the goal is the same. Show lenders that you can make payments on your debt on time every time. Yet, there are a few differences in these credit scores to consider.<\/p>\n\n
\n\t
FICO is heavily used in the US by many lenders, including mortgage, car loan, and credit card lenders. It is one of the most reported numbers, meaning you should focus your time here.<\/li>\n\t
You may benefit from your CE Score over others if you don't have a long credit history. However, remember that you do not get to pick and choose which score your lenders use. They do.<\/li>\n\t
There are different versions of each of your credit scores. For example, FICO Scores 9 and 10 are the newest versions and differ slightly in their algorithm. VantageScore has been updated over time, too.<\/li>\n<\/ul>\n\n
If you're unsure which credit score a lender will use, ask them. It's often provided in terms and conditions during the application process. This way, you know what data they use to decide on your application.<\/p>\n\n
The goal is the same, though. As long as you consistently make payments on time, you will see your credit score rise over time, and that's what lenders want before they lend to you.<\/p>\n"},"library":"H5P.AdvancedText 1.1","metadata":{"contentType":"Text","license":"U","title":"Untitled Text"},"subContentId":"af784b8c-1de7-4250-9373-de083c601775"},"useSeparator":"auto"}]},"library":"H5P.Column 1.16","subContentId":"aaa958dc-51cb-41eb-86be-c8dae19bc06d","metadata":{"contentType":"Column","license":"U","title":"FICO and other Credit Scores"}},{"params":{"content":[{"content":{"params":{"visuals":{"fit":true,"controls":true},"playback":{"autoplay":false,"loop":false},"l10n":{"name":"Video","loading":"Video player loading...","noPlayers":"Found no video players that supports the given video format.","noSources":"Video is missing sources.","aborted":"Media playback has been aborted.","networkFailure":"Network failure.","cannotDecode":"Unable to decode media.","formatNotSupported":"Video format not supported.","mediaEncrypted":"Media encrypted.","unknownError":"Unknown error.","invalidYtId":"Invalid YouTube ID.","unknownYtId":"Unable to find video with the given YouTube ID.","restrictedYt":"The owner of this video does not allow it to be embedded."},"sources":[{"path":"https:\/\/vimeo.com\/822778784\/0e5f5a3fc6?share=copy","mime":"video\/unknown","copyright":{"license":"U"}}]},"library":"H5P.Video 1.6","metadata":{"contentType":"Video","license":"U","title":"What Makes My Credit Score Go Up and Down?"},"subContentId":"5e516209-0f91-47fe-b81d-f28020400af6"},"useSeparator":"auto"}]},"library":"H5P.Column 1.16","subContentId":"909c75ea-a91b-40d5-9a58-3bdb2a3b358d","metadata":{"contentType":"Column","license":"U","title":"What Makes My Credit Score Go Up and Down?"}},{"params":{"content":[{"content":{"params":{"resizeSupported":true,"source":"https:\/\/calculators.fintactix.com\/iknowfi\/module13\/m13c1","width":"100%"},"library":"H5P.IFrameEmbed 1.0","metadata":{"contentType":"Iframe Embedder","license":"U","title":"Up? 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You know the value of your credit score \u2013 it impacts just about everything you do financially and may even affect your ability to get a job, car insurance, and a rental agreement. Yet, knowing your credit score isn't always that easy. Where do you find it? What can you do to monitor it? Here's how to manage your credit score.<\/p>\n\n
How to Get Your Credit Score<\/h2>\n\n
The first step is getting your credit score. To do that, you need to factor in some essential steps.<\/p>\n\n
Free Credit Reports<\/h3>\n\n
Your credit report does not contain your credit score, but it includes lots of information that third-party organizations use to produce your score. You have the right to a copy of your credit report every year from each of the three credit bureaus. The three bureaus provide this copy through AnnualCreditReport.com<\/a>, a tool you can access by visiting the website, inputting some of your personal identification information, and receiving documents.<\/p>\n\n
Credit Monitoring Services<\/h3>\n\n
There are third-party organizations you can use \u2013 without cost \u2013 to help you track your credit score. Credit monitoring services like these do not hurt your credit score but provide you with reasonable access to the information you need.<\/p>\n\n
These credit monitoring services include organizations like Credit Karma and Credit Sesame. These for-profit organizations, though, earn that profit by providing you with ads for credit cards and other loans.<\/p>\n\n
You can choose to purchase paid credit score access if you like. For example, you can pay for credit monitoring from Experian, Equifax, and Transunion, and they will provide you with a copy of your credit report and score consistently.<\/p>\n\n
Bank\/Credit Card Credit Score Services<\/h3>\n\n
Many times, a bank, credit union, or credit card company will also provide you with access to your credit score. They do this as a part of the service they provide, and typically without charging you to do so. Log into your credit card account online and find out if they offer your score there. It may be under settings or another component of your profile. Your bank or credit union may provide the same type of service. Log into your online portal to get this information. There should be no charge to you for this service.<\/p>\n\n
How to Track Your Credit Score<\/h2>\n\n
Now that you have your credit score, you may be unsure how to track it over time. That does not have to be a challenge if you know your options. Tracking your score can help you see how things change over time \u2013 if you make a big purchase, it could cause your score to drop slightly. If you pay off a credit card balance, that may help boost your score.<\/p>\n\n
Credit Monitoring Services<\/h3>\n\n
Like those discussed above, credit monitoring services often provide the same type of monitoring of your credit score over time. You can sign up for the service and check your score as often as every day (though some accounts have limitations on how frequently they will update you.<\/p>\n\n
Remember that checking your score through these services should not impact your credit score. However, be sure you verify this before using any such service.<\/p>\n\n
Alerts and Notifications<\/h3>\n\n
You can also set up your accounts to provide an alert or notification when your score substantially changes. You can do this with all the above services, including credit monitoring services, banks, credit card companies, and even free credit reporting services.<\/p>\n\n
Set up monitoring and notifications to alert you when there is a significant change to your credit report or score. That way, you can log in to verify that this information is accurate and report it as inaccurate if it is.<\/p>\n\n
Benefits of Tracking Your Credit Score<\/h2>\n\n
Tracking your credit score offers several benefits, especially when making it a habit. Some of those benefits include:<\/p>\n\n
\n\t
Knowing how purchases impact your score can help you to make better financial decisions over time.<\/li>\n\t
Tracking your score could help you spot identity fraud, such as someone using your credit information without your permission earlier.<\/li>\n\t
Tracking your credit score can help you work towards achieving your financial goals, such as allowing you to boost your score to qualify for a home loan or to buy a car.<\/li>\n\t
Tracking your credit score can also help you to see what happens when you pay off debt or use less of it.<\/li>\n\t
You also want to use this information to showcase how much your financial skill has improved, thanks to your ability to see your score rise over time.<\/li>\n<\/ul>\n\n
Credit Score Resources<\/h2>\n\n
There are a lot of resources available that could provide you with some insight into better managing your credit. The key here is to know that you do not have to pay for any service if you do not want to do so. You can build your score over time with good financial habits.<\/p>\n\n
Credit Counseling Agencies<\/h2>\n\n
If you struggle to pay your debts and find that your credit situation is worsening over time, it may be wise to contact a professional for additional help. Credit counseling companies are third-party organizations that work out payment plans between consumers and lenders, and they can help you get out of debt sooner.<\/p>\n\n
Credit counseling agencies can offer educational and financial literacy services as well. You do not have to use their debt management plans to benefit from these services.<\/p>\n\n
Credit Score Improvement Resources<\/h2>\n\n
If you want to improve your credit health but are unsure how or where to do so, take a few resources under your belt. Here are a few tools to help you.<\/p>\n\n
\n\t
The credit bureaus. As one of the three credit bureaus, Experian does an excellent job providing access to credit information and consumer support. Equifax and Transunion also offer these services.<\/li>\n\t
USA.gov<\/a>. This US government website includes information on your rights as a consumer using credit. You can also learn more about credit scoring, reporting disputes, and how to put a credit freeze on your account.<\/li>\n\t
Consumer Financial Protection Bureau<\/a>. This is another government-backed organization that can offer you insight into creating, building, and mastering credit usage. They offer a wide range of consumer finance-related tools.<\/li>\n\t
Fair Trade Commission<\/a>. If you are having problems with your credit report or disputes with lenders, the Federal Trade Commission can offer guidance to you.<\/li>\n\t
Financial advisors. You can always turn to a financial counselor for advice on how to build your credit.<\/li>\n<\/ul>\n\n
Credit Score Dispute Resources<\/h2>\n\n
If you find inaccurate information on your credit report, do not wait to take action. The best way to do this is to visit that credit bureau's website and file a dispute directly. If you obtain your credit report from AnnualCreditReport.com, the steps to file a dispute are linked within the credit report. Otherwise, visit each of the three credit bureau's websites and follow the steps to reporting a dispute.<\/p>\n"},"library":"H5P.AdvancedText 1.1","metadata":{"contentType":"Text","license":"U","title":"Untitled Text"},"subContentId":"8a1ebaa4-4cb7-4acb-b2b3-52bb5b602e13"},"useSeparator":"auto"}]},"library":"H5P.Column 1.16","subContentId":"4e087632-c052-420a-9254-32da33c13009","metadata":{"contentType":"Column","license":"U","title":"Getting and Tracking Your Credit Score"}}],"behaviour":{"baseColor":"#002d72","defaultTableOfContents":true,"progressIndicators":true,"progressAuto":true,"displaySummary":true},"read":"Read","displayTOC":"Display 'Table of contents'","hideTOC":"Hide 'Table of contents'","nextPage":"Next page","previousPage":"Previous page","chapterCompleted":"Page completed!","partCompleted":"@pages of @total completed","incompleteChapter":"Incomplete page","navigateToTop":"Navigate to the top","markAsFinished":"I have finished this page","fullscreen":"Fullscreen","exitFullscreen":"Exit fullscreen","bookProgressSubtext":"@count of @total pages","interactionsProgressSubtext":"@count of @total interactions","submitReport":"Submit Report","restartLabel":"Restart","summaryHeader":"Summary","allInteractions":"All interactions","unansweredInteractions":"Unanswered interactions","scoreText":"@score \/ @maxscore","leftOutOfTotalCompleted":"@left of @max interactions completed","noInteractions":"No interactions","score":"Score","summaryAndSubmit":"Summary & submit","noChapterInteractionBoldText":"You have not interacted with any pages.","noChapterInteractionText":"You have to interact with at least one page before you can see the summary.","yourAnswersAreSubmittedForReview":"Your answers are submitted for review!","bookProgress":"Book progress","interactionsProgress":"Interactions progress","totalScoreLabel":"Total score","a11y":{"progress":"Page @page of @total.","menu":"Toggle navigation menu"}}

Introduction to Credit Scores<\/h2>\n\nYour credit score is a number that typically ranges from 300 to 850, and the higher it is, the better. Lenders use your credit score to determine if they should lend to you and to determine what level of risk you are to them.<\/p>\n\n

Other Credit Scores<\/h2>\n\nAs noted, there are several other types of credit scores. They are different brands issued by various companies and organizations, and here's a look at some of them.<\/p>\n\n

How to Get Your Credit Score<\/h2>\n\nThe first step is getting your credit score. To do that, you need to factor in some essential steps.<\/p>\n\n

Benefits of Tracking Your Credit Score<\/h2>\n\nTracking your credit score offers several benefits, especially when making it a habit. Some of those benefits include:<\/p>\n\n

Credit Score Improvement Resources<\/h2>\n\nIf you want to improve your credit health but are unsure how or where to do so, take a few resources under your belt. Here are a few tools to help you.<\/p>\n\n

Introduction to Credit Scores<\/h2>\n\n
Your credit score is a number that typically ranges from 300 to 850, and the higher it is, the better. Lenders use your credit score to determine if they should lend to you and to determine what level of risk you are to them.<\/p>\n\n

Other Credit Scores<\/h2>\n\n
As noted, there are several other types of credit scores. They are different brands issued by various companies and organizations, and here's a look at some of them.<\/p>\n\n

How to Get Your Credit Score<\/h2>\n\n
The first step is getting your credit score. To do that, you need to factor in some essential steps.<\/p>\n\n