October 26, 2021•7min read
It's important to understand your credit score, how to check it, and how to maintain a good credit score and credit history.
It's difficult to imagine functioning in today’s world without credit. Whether buying a car or purchasing a home, credit has become an integral part of our everyday lives. Having easy access to credit goes hand in hand with having a good credit score.
Your credit score is based on your past and present credit transactions. The three major credit reporting agencies (Experian, Equifax, and TransUnion) track your credit history and assign you a corresponding credit score, typically using software developed by Fair Isaac Corporation (FICO).
The most common credit score is your FICO score, a three-digit number with a range from 300-850.
For the most part, that depends on the lender and your particular situation. However, individuals with
According to Experian, in general, lenders rate your credit desirability based on where your score falls within these ranges:
|Rating||Credit Score Range|
A number of factors could negatively affect your credit score, including:
You may have good credit, but you may not have a substantial credit history. As a result, you may need to build your credit history before a lender deems you worthy of taking take on additional debt.
Every consumer is entitled to a free credit report (although not access to a credit score) at least once a year from each of the three major credit reporting agencies, Experian, TransUnion and Equifax. Visit AnnualCreditReport.com for more information and to request your free report. (Some agencies may provide a free report more often than once a year.)
Borrowers with good credit are presumed to be more trustworthy and may find it easier to obtain a loan, often at a lower interest rate.”
Because a mistake on your credit report can negatively impact your credit score, it's important to monitor your credit report from each credit reporting agency on a regular basis and make sure all versions are accurate.
If you find an error on your credit report, your first step should be to contact the credit reporting agency, either online or by mail, to indicate that you are disputing information on your report. The credit reporting agency usually must investigate the dispute within 30 days of receiving it.
When disputing an error with a credit reporting agency, you should also try to resolve the issue with the creditor that submitted the inaccurate information in the first place. If the creditor corrects your information as a result of your dispute, it must notify all three credit reporting agencies to which it provided the inaccurate information.
Having a good credit score is important because most lenders use credit scores to evaluate the creditworthiness of a potential borrower. Borrowers with good credit are presumed to be more trustworthy and may find it easier to obtain a loan, often at a lower interest rate. Credit scores can even be a deciding factor when buying a house or car, renting an apartment or even applying for insurance.
Broadridge Financial Solutions, accessed June 14, 2019; FTC, “Credit Scores”, accessed June 17, 2019; Experian, “What is a Good Credit Score?”, accessed June 17, 2019.
It's important to monitor your credit. Find out how to check your credit score, get a free report and what to look for on your credit report from the reporting agencies.
Ready to begin building your credit? Find out how to build credit with and without a credit card from the experts at Patelco.
Do you have a poor credit history? No matter the reason, learn how to improve credit from the experts at Patelco.