Law and Rights

Your Credit Score, Understanding It

A study in 2007 by Bankrate showed that 45% of US consumers don't know their own credit score and 32% have never even looked at their credit report. The current numbers are probably not much better and it's no wonder.

Everyone may be in debt, but your credit score is probably not as bad as you think.

There are actually 3 different methods, but the FICO credit score is a common one. Credit scores can range from 300 to 850, and the higher number indicates a better credit rating.

Using a complex math equation, 5 areas of a credit report are weighed to make up your FICO credit score: payment history (35%), length of credit history (15%), amounts owed (30%), new credit (10%), and types of accounts you have (10%). Some things are not counted toward your score at all, like age, sex, national origin and marital status.

Banks, finance companies, and other lenders look at your credit score to make credit decisions about you, including what interest rates to apply when you ask for a loan.

Looking at the numbers on a national scale, FICO reports that 7% have a score of 549 or less. 20% are in the 550 to 649 range. 33% are in the middle at 650 to 749 on the scale. Another 27% are between 750 and 799, and the top 13% have a score above 800.

To find out what your credit score is, you can get a free copy of your credit report once a year from each of the 3 major US credit bureaus by going to http://www.annualcreditreport.com/. There are other credit report sites out there but if a web site asks you for credit card information then you are NOT on the right web site to get a free report.

You should check your credit report at least once a year so you can be sure that there are no errors on your credit report. Credit record mistakes can cost you thousands of dollars in interest charges that a better score can avoid. You can find more tips about protecting your credit record by clicking here.

Whenever you are considering applying for a loan or new credit card, it's a good idea to consider getting a new copy of your report and checking it out for accurance before you apply for new credit. It can save you big money. And if you find an error on your credit, the report usually tells you how to straighten it out.

If the credit bureau won't remove it, and it's wrong, we can help, but in many cases this is one area where you can do it yourself.

Burdge Law Office

http://www.ohiofaircredit.com/

Helping consumers solve problems since 1978.

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