When it comes to your finances, one of the most important steps you can take is to become familiar with your FICO score and know where your credit history stands. There are several factors which can influence your credit score, and it can be difficult to make the proper adjustments to your financial habits without knowing where to begin. Sometimes there are errors on credit reports that are not your fault, but can still have a negative effect on your score. You are entitled by law to request a free copy of your FICO credit score and credit report once per year, so take action and see where your credit stands.
The best way to find out your credit rating is to request it online, from one of the dozens of free credit report websites currently in business. These sites will often try to sell you additional services along with your free report, however, it is important that you remember that these services are optional. Again, you are entitled to receive your report and score for free.
Your FICO is based on your current and past financial activity, including credit card payments, bill payments, amount of debt, and available credit. These and many other factors are used to calculate a score ranging from 300 to 850, with the average American’s score coming in between 680 and 720. Once you have received your free FICO score, use this simple chart to determine how your credit score ranks:
What is a Good FICO Credit Score?
A score of 720 to 850 is excellent
A score of 680 to 720 is good
A score of 500 to 680 is low
A score of 300 to 500 is bad
By understanding where your credit currently stands, you will be able to take the right steps towards improving or maintaining it. The better your credit, the better chance you have at receiving low interest rates, better terms on credit cards and loans, and approval to rent and lease an apartment or car.