Your credit score, commonly called a FICO score, is a number reflecting your current credit risk level. It is a snap shot that changes as elements in your credit report change. It falls between 300 and 850. It is generated by software developed by a company called Fair Isaac or by one of the three national companies that maintain credit files on everyone in the country (Experian, Equifax, Trans Union). Each of these companies has its own internal proprietary computer program that evaluates all of the information in your credit file through a statistical model. The Fair Isaac program as used by lenders may include such additional factors as your income, years of employment and net worth. In all cases, the program looks at your past credit behavior and your current credit relationships to predict likely future behavior. It is a summary of your creditworthiness and is a key factor used by lenders in determining whether you’ll get a loan and at what interest rate.

You can get a credit report for free, but you will have to pay about $5 extra to get a credit score. Go to www.annualcreditreport.com to get started. The free report is quite valuable in itself. It will inform you of how many accounts you have in good standing and any potentially negative items in your report. The site will also allow you to dispute any information you feel is in error. If you go ahead and purchase your score, it is useful to note that the national average credit score is approximately 675. A score of 720 or higher is excellent and virtually guarantees you a mortgage.

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