Understanding your credit score and it's implications on lending options

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We’ve all seen the television commercialsscore inquiries. Flash forward to after you have
with the catchy jingles that tell you if you don’treceived your credit score. What do the numbers
check your credit score you will be denied for loans ormean? Basically, a credit score is a number that helps
financing and wind up driving a beat up old car, or livinglenders and other institutions “predict”
in your parent’s basement, or using a cellhow likely you are to make your credit payments on
phone that was discontinued in 1991. These ads, whiletime and how risky you seem as a borrower. It is
meant to be funny, do have some truth behind them.important to know that an individual can have up to
Knowing your credit score is very importantthree different credit scores at any given time, based
information to have if you are looking to make aon the fact that information is gathered and processed
lifestyle change, like buying a new car or purchasing athrough separate databases of all three major credit
home. Most people don’t know their creditreporting bureaus. When lenders take your score into
score. While it is easy and free to obtain a creditconsideration they usually mean the FICO score
report, getting a copy of your credit score will costdeveloped by the Fair Isaac Corporation; it is
you. Most people don’t know that their credittoday’s most commonly used scoring system.
score is not included on their credit report, which canYour credit score can range anywhere from 300-850.
account for there being countless companies out thereMost people are in the 600-700 range. When it comes
offering services to check and monitor your creditto your credit score, the higher the number the better
score.  These companies claim you can get ayou appear to lenders. In their eyes, a credit score
“free copy” of your credit score, butabove 700 is considered very good and a sign of your
what you are really paying for is the credit monitoringfinancial health. Credit scores below about 620 are
services they offer. Now, this doesn’t meanconsidered sub-prime and indicate a much higher risk
these companies are bogus. In fact, if you have badthat usually leads lenders to offer you a much higher
credit and are working to resolve credit issues andinterest rate than your 700-scored counterpart. If you
bring your score up, then these services can be helpful.don’t know your credit score, it
A simple Google search for “creditdoesn’t hurt to find out. Yes, you have to pay
score” will turn up hundreds of websitesa fee, but if you are looking to buy a car or a home,
offering services for you to get credit reports andit’s a number that can help you determine
credit scores. It is noteworthy to mention that you canwhere you stand with lenders. And remember, if you
get your credit report with your credit score from anyhave bad credit, there are always ways to improve
of the three major credit reporting agencies; Experian,your score.
Equifax, and TransUnion, but you will pay a fee for