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What Is Your FICO Score?

Sept. 3, 2013
Credit Score, Personal Finance
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By Kimberly Howard

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What is your credit score and does it matter? The most commonly used credit score is the FICO score and it really matters to your financial health. The FICO credit score was created by Fair Isaac Corporation in 1958 and it has stood the test of time. Based on the company’s scientific analysis and calculation, they determined the highest score will be 850. Congratulations to all of you with the highest score! However, for most people, their score does not reach those heights. Each lender has their own way of interpreting the score. Most lenders agree that any score above 750 is considered excellent, scores around 650 are fair and scores under 600 are considered poor. The closer you are to a 750 score, or above, the more likely you will be approved by the lender and pay lower interest rates. Next, let’s take a look at ways to give your FICO score a turbo boost.

The first and most important is to pay ALL your bills on time. Late payments and not paying those bills can really hurt your score. Next be sure and keep balances on credit cards as low as possible. Paying off debt is a much wiser choice than moving debt from credit card to credit card. Pay off the credit cards with the highest interest rates first. Every time you apply for and open a new credit account your score goes down, so be wise with those applications received in your mailbox. Raise your score by having lower balances compared to your credit limit and maintaining a longer credit history.

Your FICO score summarizes your credit risk and is based on your credit report. You must request and inspect your credit report at least annually. Each year you can receive a free copy of your credit report from There are a number of other websites that say you will receive a free credit report, but if you have to provide a credit card to get a free report then it is not really free. Only provides ‘free and no strings attached’ reports. Reports are provided from the three major credit reporting agencies (Equifax, Experian and TransUnion). Once you have your reports in hand, do not stop because you still have work to do. Verify the reports and determine if there are inaccuracies. Clear up anything that is not correct by contacting the credit reporting agencies with the correct information. Inaccurate information can cause you to be denied credit or pay a higher interest rate.

A low credit score can cost you significant time and money. Get a higher score for a winning financial life.