A credit score is a mathematical model consisting of numerous variables used to estimate one's credit risk. The most commonly used model is called FICO ® (named after its creator, the Fair Isaac Company).
Your FICO ® credit score is used to evaluate your creditworthiness by giving you a certain amount of points based on the information contained in your credit report and your debt-to-income ratio. The highest score a person can receive is 850; the lowest is 300, but generally, a score of 700 or higher means your credit is considered to be good; a score of 750 or higher means your score is excellent. A score below 660 means that you might have trouble obtaining credit or you will definitely have to pay a higher interest rate for the financing you do receive.
About 75% of all lenders use the FICO score in their lending decisions; however, it should be noted that not every single lender uses the FICO ® model; however, the models they use are very similar to it. Also, lenders vary in what is important to them in terms of loan approval. One lender might place more weight on payment history, while another places more weight on income.
Typical Credit Score Composition:
What is Your FICO Credit Score?
If your FICO credit score is 750 or above, you are considered to be an excellent credit risk and should not have a problem obtaining credit and will likely be offered financing at the lowest available rate. Your goal should be to obtain a 720 or higher FICO credit score so that you can save thousands on mortgage and car loans and credit cards.
How to Order Your FICO ® Credit Score
You can order your FICO ® credit score at any one of the three credit reporting agencies also known as credit bureaus -- Experian, Equifax or Trans Union -- or at myfico.com. Your credit score will vary at each of the credit bureaus since they don't have the same mix of information about you. Click here for more information about your three FICO credit scores.
