Ever notice how you go to apply for a new credit card, loan or even store card and either the banker or application asks about your credit score?
The term credit score is just about everywhere, and it seems as if having the highest credit score possible can open up all sorts of doors for an individual.
Is that true? Well, yes and no.
It’s true that having a high credit score can help you out in a variety of different ways, including being approved for a car or home loan, but does having the highest credit score really make your life that much better? Is it even possible?
Yes, you want to have a high credit score, but perfect means something different to every individual. So, before we talk about improving your credit score, let’s talk about what this score is.
What Is a Credit Score?
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Simply put, an individual’s credit score is a three-digit number that relates to how likely they are to repay debt. Remember how we stated that applying for a credit card or loan refers to these scores? That is because loans and credit cards are banks or organization lending you money.
Your credit score will tell them what their risk level is if they should decide to lend you that money. Those who have higher credit scores are more likely to be approved for larger credit limits or loans because they have proven that they can keep their debt down while also repaying their debt in a timely manner.
While many believe that they have a single credit score, the truth is that each person has a variety of different scores depending on which credit bureau they are checking with. Before we talk about the different credit bureaus, let’s look at the two main ways that a credit score is calculated.
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Ever notice how your FICO score seems to be popping out more often? For example, many big-name banks now include your FICO score with your monthly credit card statement. But what is a FICO score?
A FICO score is a credit score that is developed by a company, Fair Isaac Co., that specializes in “predictive analytics.” This means that they take information and analyze it to try and predict what may happen, such as when a person applies for a new credit card.
The FICO score of that individual will help …read more
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