The relatively-recent barrage of credit score source commercials on television would lead you to believe that such a number is quite important. And indeed it is, for it often dictates, or at least heavily influences, your mortgage approval, interest rates, insurance premiums, utility security deposits, employment opportunities, and even cell phone contracts. Who knew?
A credit score, often called a FICO score, helps lenders and service providers evaluate your credit report because it is a number that summarizes your current credit risk. The higher the score, the better for you. Generally speaking, credit scores below 550 are consider poor, 550 to 620 subprime, 620 to 680 acceptable, 680 to 740 good, and above 740 excellent.
Obviously, it is in your best interests to know your current credit score and to periodically check the report itself for misinformation or for fraudulent charges (ID theft indicator). How to do so? The Fair Credit Reporting Act (FCRA) requires each of the nationwide credit reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months. You can make one request to all three companies at one time, or you may stagger them during the year. Only www.annualcreditreport.com is authorized to fill orders for the free annual credit report you are entitled to under law. Other websites that claim to offer “free credit reports,” “free credit scores” or “free credit monitoring” are not part of the legally mandated free annual credit report program, and In many cases the “free” product comes with strings attached.
If your credit score is high, rejoice, be proud, and work to maintain that rating. If it is in the acceptable to good category, take steps to increase the number by consistently making timely payments, reducing the amount you owe, not closing or opening any new accounts, and keeping balances low on credit cards.
If you fall into the subprime or poor range, you will need to take additional steps to improve your rating. It's important to note that repairing bad credit takes time and there is no quick way to raise that number. In fact, out of all of the ways to improve a credit score, quick-fix efforts are the most likely to backfire, so beware of any advice that claims to improve your credit score fast. Unfortunately, here is no “quick fix.”
Be patient, proactive, and aware.