Your credit or FICO score as it is commonly known, is a very important score to understand. You should be aware of many aspects of your credit score but four of the most important are listed below. The more you understand about your credit and how your actions impact the score the better prepared you will be to improve and keep your credit score at a level that lenders will give you the best rate and the loan amounts you desire.
- 90% of lenders still use the FICO score so it is important to monitor this score over any other score that is reported. Other scores may be higher or lower than your FICO score.
- Poor credit costs you thousands of dollars because you will be paying a higher interest rate than those with good credit. Higher rate also will cause your payments to be higher as well.
- Payment history and credit utilization are most important aspects of calculating a FICO score. Paying on time and not fully extending on all of your revolving loans will be critical in building and maintaining your credit.
- FICO score range is from 300 to 850 with 850 being the very best and 300 being the worst. Most lenders looking for scores over 600 and consider 775 and higher to be excellent scores.
Understanding what goes into your FICO score and why it matters are important components of building a strong financial foundation.