Credit Scores: What You Need to Know

You may not have checked your credit score lately, but there’s a good chance someone else has.

If you have applied for a mortgage or a loan — or even received a credit card offer in the mail — someone accessed that three-digit number to help determine the amount you can borrow and the interest you’ll owe on it.

So what goes into this all-important score? And how can you make sure you’ve got a good one?

The term credit score usually refers to your FICO score, a number based on a formula developed by the Fair Isaac Corporation. Fair Isaac looks at a summary of all your credit accounts and payment history. If you’ve got a mortgage, a MasterCard or a Macy’s account, it will be included in the report, as will late or missed payments. FICO scores range from 300 to 850, and Fair Isaac calculates them for each of the three big credit-reporting agencies: Equifax, Experian and TransUnion. That’s one reason why your FICO score with each may differ slightly. Generally speaking, the higher your score, the more money you can borrow and the less you’ll pay for the loan.



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