Card Resources: Know Your Credit Score!
What’s your score? No we are not asking you about your golf game, last night’s baseball game or even about any other sporting event; we are talking about a number that is much more important – your credit score!
Today many important financial transactions and decisions are based on a consumer’s credit score. So, what’s a credit score? It is a three digit number that is based on the experience you have in handling your credit. It comes from all of the data that is contained on your credit report that is gathered by the three major credit reporting companies.
The credit scoring model that is currently used was established by the Fair Isaac Company. They use the existing credit information from the credit bureaus to come up with the credit score. The score is based on a number of factors such as the amount of time a consumer has had credit, the number of new credit accounts that have been established and one of the most important factors is how the credit has been paid. If credit accounts such as credit cards, mortgages and other loans have been paid on time, this will increase the credit score.
Credit scores can range from around 450 to around 830. The higher the score, the better the credit rating and the lower the risk that lenders face. That’s important because banks, credit unions, mortgage companies, insurance companies and even some employers are using credit scores to judge people. For example, a person applying for an auto loan with a credit score of 750 will have a much lower interest rate than a person with a credit score of 630. This can result in a savings of hundreds or thousands of dollars in interest charges.
Because of the importance of credit scores and credit histories, people need to be aware of how they handle their finances, and the effect it has on their credit. It is especially important for teens and young adults to learn about handling credit properly. Financial mistakes made at an early age will carry with them for many years and can have a negative effect on getting loans, insurance or even getting a job.
Please feel free to review the following resources to learn more about credit reports, credit histories and credit scores, and how it affects our finances now and in the future.
What is a Credit Score?
- About Credit Scores – Educational article from Fair Isaac which provides some background information on where credit scores are derived.
- Your Credit Score – Government publication available for download giving information on credit scoring.
- Need Credit or Insurance? – Informative page showing how credit scores are important in obtaining credit or insurance.
- What is a Credit Score? – General information for consumers on what comprises a credit score.
- Credit Score Ranges – Typical credit score ranges are given and what they mean about credit and interest rates.
What is a Credit Report?
- Access Free Credit Reports – Information from the FTC about the law that allows consumer the ability to view their credit reports on an annual basis.
- Credit Report Information – Information on gathering credit information from one of the three major credit reporting agencies.
- Credit Report Definition – Basic definition of what a credit report is and what it contains.
- Definition of a Credit Report – Useful definition of a credit report and how three credit agencies provide the data and analyze the information.
- About Credit Reports – Informative page providing a look at how credit reports are created.
- How Credit Reports Work – Helpful overview giving consumers a look at how credit reports are gathered and used.
How Are They Used?
- Legal Uses of a Credit Report – Helpful legal article about who can use a credit report or credit score and for what reason.
- Who’s Looking at Your Credit Report? – Article explaining the uses of a credit report and how people can access them.
- Your Credit Rights (PDF) – Informative article from the Federal Trade Commission explaining how consumers have rights under the Fair Credit Reporting Act.
- Credit Reports – Information on a number of topics related to credit reports and how they can legally be used by others.
How Can You Improve Them
- Tips to Raise Credit Scores – Helpful hints and ideas from Fair Isaac Company on how to raise a consumer credit score.
- Credit Fixes – Article containing nine easy to implement suggestions on how to improve your credit.
- Improving Your Credit Score – Informative resource from the Federal Reserve Bank on ways that consumers can improve their credit.
- Credit Tips – Useful page of tips that people can do to improve their credit standing.
- Forbes Credit Score Information – Article from Forbes Magazine online explaining how you can improve your credit history and score.
- Improve Your Score – Information from the Better Business Bureau for consumers on how they can improve their scores.
Teaching Teens About Credit
- Teens and Financial Education – Information on a survey conducted showing the lack of financial knowledge of teenagers.
- Credit Scores and Teens – NPR feature on the how a credit score is just as important to a teenager as a SAT score and why.
- Financial Education Resources – Collection of helpful websites to help teach kids and teens about various aspects of finances.
- Reading Writing and Credit Scoring – Useful blog aimed at young adults and teens about how knowing about credit is very important.
Credit Education Resources
- Financial Education Resources – Listing of helpful resources for consumers on a number of important financial topics.
- Educational Resources – Collection of useful documents and websites dealing with everyday issues for consumers.
- My Money – Informative portal of information from the U.S. government discussing a variety of topics.
- Educational Credit Resources – Useful page containing information on several topics of interest pertaining to consumer credit education.
- What’s in Your Credit Score? – Information on what comprises a credit score and how much each factor is valued.