Understanding a Credit Score

Back to Basics: Credit Scores

I thought I'd bring it back to basics today, because there are plenty of folks out there just learning the importance of a credit score (and many more who need a refresher!).

In a nutshell, a good credit score saves you money. Here's how:

1. A high credit score indicates you have a positive credit history (you've paid your bills on time, you aren't drowning in debt, etc.)
2. Lenders are more likely to offer lower interest rates to people with high credit scores. 
3. Low interest rates mean you pay less in interest each month on your credit cards, cars, home, and personal loans.
4. These savings can mean you pay hundreds, or even thousands, less to your creditors each year!

But wait, there's more! (Do I sound like an infomercial yet?) Having good credit saves you money even if you aren't applying for a new loan. It can help you get that low-cost apartment you really wanted, that high-paying job you interviewed for, lower car insurance and life insurance premiums, and it can keep you in the good graces of your existing creditors (making it less likely that they'll rachet up your current interest rate).

Check out these credit score links to learn more:

Credit Scores 101

Learn more of the basics behind how credit scores work and what they mean.

How Credit Scores Are Calculated

See the formula for calculating a credit score, and learn what you can do to improve yours.

What is a Good Credit Score?

Find out if your score is excellent, great, good, fair, or poor.

Getting Your Score

Learn where you can purchase your scores, and how you can get them for free.

What Impacts Your Score, and for How Long

See which bits of negative information hurt your score the most, and how long they will impact your score.

FICO Scores

The Fair Isaac Corporation started it all back in the 1950s. But did you know you have multiple FICO scores?