Credit scores are used by various companies, such as utilities, insurers, mortgage companies, employers, creditors and several others to decide if they want you as a customer, an employee or a tenant. Credit scores measure risk. It is extremely important information, therefore, you should know what your credit score is and what it means.

According to a new survey of adult Americans conducted by the Opinion Research Corporation International for CFA and Providian Financial, the majority of consumers do not understand what credit scores measure, what is a good or bad score or how scores can be improved.

The truth is, credit scores will save or cost you money if you do not take the time to learn about how they affect your everyday life. Just because a credit bureau gives you a credit score that does not mean you cannot improve it or make modifications. It is in your best interest to have the highest credit score possible.

There are three credit bureaus, Equifax, Experian, and TransUnion. Each of these credit bureaus computes a person’s credit score slightly differently and they usually differ a few credit points between credit bureaus. Click here for a list of contact information, address, and toll free numbers for each credit bureau.

Here is an example of how a credit score can save or cost you money. On a $150,000, 30-year, fixed-rate mortgage, a person with credit scores of more than 720 might be charged a 5.72 percent rate with monthly payments of $872. However, a person with credit scores less than 560 could pay 9.29 percent with monthly payments of $1,238. Those valuable credit score points would cost a difference of $4,392 per year.

A credit score of less than 600 usually results in credit denial or a higher sub prime interest rate. Whereas, credit scores of more than 700 usually qualify a person for the lower interest rates. Persons with a score of 760 or more usually get the lowest interest rates. 

If you wish to improve your FICO score, we suggest you click here.