You don’t get As or Bs on this one. Your credit report basically shows how “creditworthy” you are by reporting the number given to you by a special agency that reflects your credit and payment history. Often called a FICO score (which stands for Fair, Isaac Company), the value ranges from 300 to 850. The higher the number, the better your credit rating. (By the way, the whole credit world is really important, as you want to buy bigger and more expensive stuff. MoneyStrong helps you make the financial decisions that help you build your credit.)
Your credit history and credit report are extremely important and may affect many things you want to do in your life. Lenders consider people with high credit scores to be low-risk, desirable customers who are worthy of low-interest rates on loans. That’s good.
But, if you have a low credit score:
- You may be denied when applying for credit cards, car loans, mortgages, etc. If granted credit, you will likely pay very high interest rates.
- You could have trouble renting an apartment.
- Employers who have access to your credit score may deny you employment.
- Colleges and graduate schools may reject your application for admission.
- You will likely pay higher insurance premiums.
- You will likely have to pay large deposits for things like utilities or cell-phone access.
What Factors Influence Your Score?
Now we’re getting into the nitty-gritty. Your credit score is determined using five factors:
- Your payment history
- The amount you owe to all creditors
- How long you’ve had credit
- Your accumulation of debt
- The different types of debt you have
