theSkimm on Credit Scores | theSkimm

theSkimm on Credit Scores

Published on: May 8, 2020fb-roundtwitter-roundemail-round
Credit scoreboard

The Story

School may be over, but you’re still getting graded. Meet your credit score: the financial world’s way of judging your life choices.

I’ll pass on that.

Not a good idea. A high credit score tells lenders that you’re good for any money they let you borrow. If you’ve been responsible with credit in the past (and have a good score), they’ll be more likely to give you a lower interest rate. If your score’s not so great, they’ll probably charge more interest to make up for taking more risk. Paying less interest on your debt can save you thousands over time on big loans like mortgages.

What if I don’t plan on taking out a new loan anytime soon?

Your score still matters. Landlords and even new employers could run your credit before handing over the keys to your new apartment...or office.

How do I know where I stand?

Ask FICO. Created by Fair Isaac Corporation back in the ‘80s, FICO scores are the most popular credit scoring model. They’re calculated based on info in your credit report – a play-by-play of your credit history, maintained by three credit bureaus, TransUnion, Experian, and Equifax.

FICO specifically looks at things like whether you pay bills on time, your debt balances, the length of your credit history, recent credit applications, and what types of loans you have.

How can I see what they’re saying about me?

You might get a free credit score on your monthly credit card or loan statement. You can also request a copy of your credit report from each credit bureau once a year at www.AnnualCreditReport.com

Heads up that since there are three different credit bureaus compiling your info, you might actually have a few scores. As in, it’s possible to be an Equifax 730 and a Transunion 750.

theSkimm

Your credit score is how you tell new lenders, landlords, and bosses whether you’re a trustworthy adult. Getting a high score makes you look good and can help you save money.