Your Credit Score


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Did you know there is no single number for your credit score? FICO, which stands for Fair Isaac Company, is the organization that created the credit score calculation.

Each of the credit bureaus, Experian, TransUnion, and Equifax has their own system for scoring.

FICO scores range from 300-850. The higher the better. (According to Kiplinger’s Personal Finance, July 2012, you’ll need a score of 760 or better for the best mortgage rates. 720 should be fine for getting you the best deal on an auto loan. A few years ago, a new competitor joined FICO, and the three credit bureaus. About 10% of lenders now use Vantage Score, which has a scale from 501-999 with corresponding grades from A to F. (A= above 900).

No matter what your lender uses, if you’re denied a loan, or given a rate less than the best, a lender must tell you the score it used, along with the range and reasons that worked against your score.

Monitor your credit throughout the year. You can get one free credit report from each of the credit bureaus through http://www.annualcreditreport.com. The free credit report does not include a credit score. The score is not free. You can get your credit score from http://www.myfico.com.

Most lenders, especially mortgage, will turn to FICO for your credit score, the one you pay for. I suggest getting your score from FICO rather than the credit bureaus.

I’ve heard people say, “It said ‘free trial’ and I got billed.” Avoid credit reports and scores that mention anything about a “trial” “subscription” or other similar words. Stick to the websites listed above. Check the web addresses to be exact, not close to the address you’re looking for.

 

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