What Does a Credit Score Number Mean?Your credit score--also called a FICO score--is a powerful and important number. It can not only determine the rate you get on a car loan or mortgage, but also whether you qualify in the first place for such loans. Knowing your number, which can range from 300 to 850, allows you to assess your personal financial situation and, if necessary, take steps to make it better.
What is a credit score? It was created by the Fair Isaac Corp. as a way to assess individuals' personal credit risk and to help lenders decide if it's wise to loan someone money. The higher the score, the better you look as a credit risk.
What do the numbers mean?
How is your FICO score calculated? You need to understand this so you can take steps to improve your score. Bankrate.com explains there are five pieces that go into the equation.
1. Payment history: 35 percent
2. Amount of debt: 30 percent
3. Length of credit history: 15 percent
4. New credit: 10 percent
5. Credit mix: 10 percent
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