Part 1 of a series of useful info from our Consumer Loan Guru, Ray Schantz
Why is it important to be aware of your credit score?
Credit scores are used to determine if you are “credit worthy” and how much interest you should pay. A low score can make you pay more for new credit, or pay more on the credit you already have. For example, you might end up with a higher interest rate on a credit card, or car loan, which means you end up paying more in the long run.
A low credit score might also mean you pay more for insurance; you might get denied for a job or denied by a landlord for that new apartment you’re looking to move into. Most employers and rental companies will do a credit check before approving you. Being aware of your credit is also a way to be alerted to identity theft.
So what exactly is a credit score?
It’s also known as a FICO score (Fair Isaac & Company) which is used by the major credit bureau Trans Union. A FICO is just a number given to you based on your credit report, ranging from 300 to 850.
There are other rating systems in addition to the FICO score, including a Vantage Score (used by the credit bureau Experian) and the Beacon Score (used by the credit bureaus Equifax and Experian). The Vantage Score ranges from 501-990, so your score will be higher from Vantage than Beacon or Equifax.
The point is not which system you check, the point is to try to keep your score up. The higher your score, the less of a risk you are considered and the better your interest rate will be.