What’s Your Credit Score?

Your credit score has been affecting your life for years. You may not even know that you have a credit score. When you apply for credit or a loan, lenders from credit card companies, home equity, auto loan lenders, and finance companies use the score. It is produced with a computer model created by Fair, Isaac & Co. (or "FICO.")

A credit score is an outline of your credit history. A low score can mean you don't get a credit card or a loan. Or it can mean you will pay a higher interest rate, if you get a credit card or a loan. Some lenders use your credit score and other information to set the "price" for your loan.

Payment history

(35%) Negative marks occur when you paid bills late, had an account sent to collection, or declared bankruptcy. Not paying your bills will hurt your score more than bankruptcy five years ago.

Outstanding debt

(30%) If you have maxed out your credit limit on a card, this is a negative mark. A low balance on two cards is better than a high balance on one.

Length of your credit history

(15%) The longer your accounts have been open the better.

Recent inquiries on your report

(10%) If you have recently applied for many new accounts, this is a negative mark. Promotional inquiries don't count.

Types of credit in use

(10%) Loans from finance companies usually lower your credit score. FICO uses this factor when there isn't a lot of other information upon which to base a score.

This is a guide to what credit scoring companies see as key. Some companies may consider extra factors. The law states that a business cannot base the credit score on: age, race, gender, education, national origin, marital status, and receipt of public assistance.

What the Numbers Mean?

Credit scores range from 300 to 900. The average is around 750. As your score increases, your risk of default decreases. There is a link between low scores and high default rates. Like your credit history, your score varies from one credit bureau to another. Lenders look at three credit bureaus files and usually take the middle score.

How to Get Your Credit Score?

Credit scorers are not required by law to reveal credit scores to consumers. Since 2001, consumers can secure for a fee ($12.95) their credit score. To get your credit score, visit


Source: Nolo Legal Encyclopedia http://www.nolo.com/lawcenter/ency/index.cfm.

Edited by Katherine Reuter, Extension Educator, Consumer and Family Economics, University of Illinois Extension,Countryside Extension Center.

Prepared by Susan E. Taylor, Extension Educator, Consumer and Family Economic, University of Illinois Extension, Matteson Extension Center


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