Understanding Credit Scores (VIDEO)

What is a credit score?

When a consumer applies for credit lenders want to know what risk they’d take by loaning money. A credit score helps lenders evaluate a credit report. It is a number that summarizes credit risk, based on a snapshot of a credit report. Ultimately, credit scores influence the credit that’s available and the terms that lenders may offer.

What is a good credit score?

FICO Scores have a 300–850 score range. The higher the score, the lower the risk. But there is no magic number whether a specific person will be a “good” or “bad” customer. While many lenders use FICO Scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable for a given credit product.

How can you improve my credit score?

Make healthy repayment habits such as: Pay your bills on time. Get current with missed payments. Keep balances low by paying off debt rather than moving it around. Don’t close unused credit cards and don’t open unneeded credit accounts. Be smart about credit.

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