Credit scores have assumed immense importance in our financial lives and many-perhaps the majority of consumers-dont realize it. Never before have our financial transactions been so closely monitored by the credit bureaus and used to detern=mine our credit risk based on the credit score that is calculated.
A credit score affects how much interest we pay on mortgages, consumer loans, credit cards and more. The difference between a good score and a bad one can be tens or even hundreds of dollars over our adult lives.
All of this is a strong argument for becoming an eduacated consumer on the subject. But for most of us the credit scoring system is very confusing.
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So let me help you understand:
FACT: All credit scores are not created equal
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FACT: The credit score you should pay attention to is the FICO score.
The global standard for measuring credit risk is based on a formula developed by Fair Isaac Corporation, FICO scores range from 300-850, the higher the better. The best place to get you FICO score is straight from the company at myfico.com. Every credit bureau is required to give consumers one free credit reprot per year. (annualcreditreport.com) Checking your credit scores once a year is a wise move, because you never know if there is an error in the information that is being reported which will affect you if you need to borrow money or decide to buy a house.
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