What is a credit score?
A credit score is a three-digit number that calculates the risk a lender takes when you borrow money. This score is based on your credit report, and is generated by a mathematical algorithm. The Fair Isaac Corporation (FICO) credit score is used by 90% of lenders (source: myFICO.com).
Why is your credit score important?
Your credit score is an important piece of your personal finances. It helps lenders accurately predict your ability to repay a debt on time. FICO scores range from 300 to 850, and a higher number indicates a lower risk to lenders.
If your credit score is low/poor, it may be difficult to find a financial institution or credit card company to lend you money, and if they do, most likely the interest rate will be unfavorable. An increasing amount of landlords and potential employers are starting to check credit scores before leasing or hiring, and insurance companies may check credit scores when determining your premium costs.
How can I access my credit report and credit score?
As a consumer, you have access to a free annual credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) using annualcreditreport.com. Unfortunately, your credit score is not included on your credit report. To obtain your credit score number, you would need to purchase it from a score provider or one of the major credit bureaus.
For additional information on credit and credit management, students should visit the UWW Financial Literacy Center’s website or schedule a financial coaching session today!