Your credit score is a number that reflects how you spend and pay back your money. Banks and lending companies use this number as one of the factors to decide how much they will charge to lend you their money. The higher your credit score, the better your chance of getting a loan.
Most of these scores are produced by the Fair Isaac Company, who collects credit information to come up with a credit score they call a FICO score. Credit score numbers range from about 350 (very low) to more than 800 (high).
Is your credit score important?
Your credit score is used to compare you to other people who are looking for loans. You probably don’t need to know your credit score if you have already looked at a copy of your credit report, as it’s mainly used by banks to answer some of these questions:
- How much money can you borrow to buy a house?
- What interest rate can you get (how much will you pay to borrow that money)?
- How much will a landlord trust you to pay your rent on time each month?
- What kind of spending limit will you have on your credit card?
- How much will you pay for your insurance?
How do you get your credit score?
You can get an idea of your credit score for free at Credit Karma or you can purchase your credit score from myfico.com for around $50.