Your FICO® Credit Score – Part 1

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4 essential things you need to know

There’s a lot you should know about your FICO score — the number, based on your credit history, creditors consider when you apply for a credit card or loan. In Part 1 of this article, we’re looking at 4 important questions you should know about FICO credit scores.

1. What, exactly is a FICO Score?

Your FICO score is a number from 300-850 that reflects how safe (or risky) it is for a lender to let you borrow money. Lenders use it when you try to buy a home or car, apply for a credit card, personal loan, or student loan. Your score lets lenders know:

  • How reliably you pay off your loans,
  • How much money might be safe (or risky) to lend you, and
  • What interest rate you should get, based on your financial reliability or risk.

Your score is calculated from detailed reports about payments you’ve made to lenders in the past and how much credit and debt you have. There are 5 factors to your score:

2. Is my score good?

The higher your score, the better you look, and the lower your risk, to lenders. In 2017, the average FICO score in the US was 700. Although FICO has 4 official rankings — excellent, good, average, and poor), the 5 ranges below might be more meaningful estimates:

3. Who decides what my score is?

FICO, short for Fair Isaac Corporation, is a software and data analysis firm that tries to predict consumer behavior from its clients. FICO calculates your credit score from credit reports provided by “credit bureaus.”

There are 3 credit bureaus in the US: Equifax, Experian, and TransUnion.

Credit reports contain detailed information about you and your credit history, including:

  • Personal identifying data (like your Social Security number)
  • Credit accounts you’ve had
  • Inquiries that have been made by lends about your credit
  • Liens, collections, bankruptcies, and more   

Each of the 3 credit bureaus may have slightly different information about you, and each has its own credit score evaluation: Equifax is 280-850, Experian 360-840, and TransUnion is 300-850.

4. How can I get my credit reports and scores?

Credit Reports:

You are entitled by law to receive a FREE copy of your credit report once every 12 months. To get a free credit report from all 3 bureaus, go here, or call 877-322-8228.

You are also entitled to free credit reports if you are a victim of identity theft, unemployed, or have been denied credit. Non-profit credit counselors can help you get your free credit reports as well. You can find approved credit counseling agencies with the US Department of Justice.

Credit Scores:

There are several sites where you can access your credit score for free. You can get your Experian score and report at Free Credit Score, and you can see your Equifax and TransUnion scores at Credit Karma. Some credit card companies also provide free credit scores.

Many companies offer a variety of credit-related services for a fee, including access to your credit score. Beware of companies that offer “free reports” only if you subscribe to their services. Use free resources first.

For more information on credit reporting, visit the FTC.  

Check out Part 2 for more information on your FICO credit score. At Dime, we’re always here to help you make the most of your financial goals.

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