Building Credit and Credit Score

3/26/2021

Learn the steps to take to grow and maintain a strong credit score. Young lady with images of words for a good credit score.  

A credit score tells lenders about your creditworthiness (how likely you are to pay back a loan based on your credit history). It is calculated using the information in your credit reports. FICO Scores are the standard for credit scores used by 90% of top lenders. A credit score helps lenders evaluate a credit report. It is a number that summarizes credit risk, based on a snapshot of a credit report at a particular point in time.

A credit score of 700 or above is generally considered good, for a score with a range between 300 and 850. A score of 800 or above on the same range is considered to be excellent.

Most consumers have credit scores that fall between 600 and 750. In 2020, the average FICO in the U.S. reached 710—an increase of seven points from the previous year.

Higher scores can make creditors more confident that you will repay your future debts as agreed. But creditors may also set their own definitions for what they consider to be good or bad credit scores when evaluating consumers for loans and credit cards.

Credit scores influence the credit that is available to a person and the terms (interest rate, etc.) that lenders may offer. It's a vital part of credit health.

When you apply for credit — whether for a credit card, an auto loan, or a mortgage—lenders want to know what risk they'd take by loaning money. When lenders order a credit report, they can also request a credit score that is based on the information in the report.

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