What is a Credit Score?

Today 720+ FICO credit score is crucial for financial success. All types of credit scores are built from 3-digit number generated by a mathematical algorithm checking and saving your information from credit history.

This score system is designed to predict risk and help lenders to determine your creditworthiness for a mortgage, loan or credit card.  There are a multitude of credit-scoring models in existence, but there's one that dominates the market: the FICO credit score. According to myFICO.com, the consumer website for the FICO score developer,

"90 percent of all financial institutions in the U.S. use FICO scores in their decision-making process".

FICO credit scores range are from 300 to 850, where a higher score indicates lower risk & lower score high risk.  You can three different FICO scores, one form each three major credit bureaus: Equifax, Experian and TransUnion. Your score can affect whether or not you are approved as well as what interest rate you are charged

All credit score ranges: 

FICO Score range: 300-850

Equifax Credit Score: 280–850 

TransRisk Score: 100-900 

VantageScore 3.0 range: 300–850 

VantageScore scale (versions 1.0 and 2.0): 501–990 

PLUS Score: 330-830

What goes into a credit score?

There are five major categories that build your FICO score.

Payment history: (35%) -- Your account payment information, including any delinquencies and public records. 

Credit line used: (30%) -- How much you owe on your accounts its better not to use more than 30% from your credit line. 

Length of credit history: (15%) -- Oldest account VS Newest account

Types of accounts: (10%) -- The mix of accounts you have, such as mortgage, loan or credit card. 

Inquiries: (10%) -- When you have too many inquiries lenders think you need money ASAP and won’t trust you.