You’ve probably heard of your FICO score, but how much do you really know about it?
Did you know that this crucial number is used by 90 percent of lenders to determine your creditworthiness?
Can you name the five factors that go into giving you this three-digit rating?
Your credit score is calculated based on the length of your credit history, the amount you owe, how much new credit you’ve taken, your credit mix, and your payment history.
Understanding how these factors come into play will give you a roadmap to improving your FICO score.
Your payment history accounts for over 35 percent of your credit score.
If you can do only one thing to improve your FICO score, you should make sure you’re making payments on time.
The amount you owe is the next-biggest factor, so you should focus on paying down your credit next.
Factors like the length of your history and your credit mix are less important, so you can work with those later.
A good FICO score is desirable for many reasons.
If you’re interested in taking out a mortgage, purchasing a new vehicle with a loan, or getting a credit card, you’ll need a good FICO score just to get approved.
The terms of your credit will depend on your score as well.
If you have a high FICO score, you’ll enjoy lower interest rates, while those with a low score will ultimately pay more.
Learn more about your FICO score with the quiz below and start shaping up your credit.