"Do you know your credit score?" Throughout your financial life, many people will ask you this question. Whether you were taught or learned through experience, it doesn't take long before you realize how important your credit score is. However, while many people know that a good credit score is invaluable to securing a credit card or loan, few understand what a "good" credit score actually is.
What Does That 3-Digit Number Mean?
When a lender, bank or credit institution pulls your credit report, the credit bureau associates a score with your account. Since there are three credit bureaus (Experian, Trans Union and Equifax), you'll actually have 3 scores. Your score will range between 300 to 850. If you have established credit, it is likely your score will be above 400 even if you have a variety of negative factors like a recent bankruptcy, late payments or numerous collections. Sometimes, people who have no credit history will have a very high score however this is usually considered to be negative by lenders because they have no way to assess how well the person will manage credit given to them.
