Understanding Your Credit Score

Transcript from the video

Hello and welcome to Lexington Law Firm. Today in this clip, we’re going to discuss the importance of credit scores and what builds up your credit score.

Some of you may be asking, “what is a credit score”, or “what builds a credit score”? That’s what we’re going to chat about today. Online you may find all sorts of different offers and advertisements about finding your credit score or better understanding your credit score, or what is your credit score versus your FICO score? Today we’re going to discuss the difference between the two and what builds up your credit score.

So essentially, people such as lenders, banks, credit card companies, phone companies, even potential employers are going to look at your credit score and determine whether or not you: understand how to use your finances, if you have a good payment history, whether or not you’ve been paying your bills on time, and to essentially determine, or make a decision on, whether or not you are a credit risk.

The credit score was created to predict the likely-hood that you won’t pay your bills. Your credit score can be used by many different professionals such as mortgage lenders, car loan lenders and credit card companies. These days even land lords, cell phone companies and even potential employers will use your credit score to determine whether you are a good or bad credit risk.

Most consumers assume that their mortgage lender or the car dealership where their going to apply for a new car for, are seeing the same credit score that they’re seeing when they look online. Unfortunately, most mortgage professionals and car dealerships are using the actual FICO score to determine whether or not you are a credit risk. So if you are checking your credit score online, it may be wise to check out a certified FICO score. Where you could find this is: myfico.com.

So as a quick credit score overview, your credit score is a quick credit score number ranging from 300 to 850. 300 being a bad score, 850 being a good score. The credit score predicts the chances of you going delinquent on any given account. And the credit score helps lenders know the level of risk you represent in any given moment. And as your score is derived from bureau data, it will change every time your credit reports change.

So hopefully you’ve enjoyed this small clip about what a credit score is. Hopefully you can learn and understand why the credit score is so important. And later on we’ll discuss what builds a credit score and how to better yours…