Credit Score

Understanding Your Credit Score

What is a Credit Score?

Your credit score is a number that is supposed to reflect your “creditworthiness” at a given point in time.  Using many factors about your history of credit use, your credit score is supposed to indicate how much risk you pose to a potential lender.  The higher the score indicates you are more likely to repay the debt on time and in full; the lower the score, the less likely you are to repay the debt on time and in full.

 The main credit scoring model, the FICO score, ranges from 300 to 850.

Did You Know?  Your individual FICO score may vary depending on the type of business checking your score and the sources)of the information.

Maintaining a good credit score is important not only because you will be able to get the credit you need, but also because it won’t cost as much.  People with lower credit scores are generally required to pay higher interest on mortgages, auto loans, installment loans and credit cards.

Bankruptcy & Your Credit Score

Bankruptcy may lower your credit score on average by 100 points. Depending on how much debt you were carrying before you filed, bankruptcy may actually increase your credit score slightly because you no longer have the same strains on your income that you did before you filed.


Want more information on credit scores?

“Credit Scores & Credit Reports:  How The System Really Works, What You Can Do” by Evan D. Hendricks.