Q. What is a Good Credit Score?

A. First, let’s discover the full history of your credit score. One of the first credit organizations to utilize credit score ratings developed by Earl Issac and Bill Fair were Montgomery Wards and Carte Blanche.  The system they developed used math formulas to rate a person’s ability to pay back credit advanced to them against what they earned. This formula became known as a FICO score and is used by most lenders and appears on all credit agencies reports.

There are five parts to the calculation and each item is given a different classification.  35% of your credit rating score is determined by how you pay your bills.  If you have a good score but miss a payment, it will drop your rating considerably.  30% Is based upon how much you owe.  If you have a lot of balances that are almost at the limit, this will severely limit how much you need to afford your lifestyle and will lower your credit score.  If you are living from paycheck to paycheck, you are walking a serious debt line.

Also taken into consideration is how long you have been receiving credit (15%), how many times you have applied for credit elsewhere, incurring more debt (10%) and the kind of credit types you have, i.e., car loan, mortgage, credit cards (10%).

According to the myFICO.com web site, the median score in the United States is 723. About one third of Americans have scores between 550 and 700 while 7% have scores lower than that.

Therefore, if your FICO score is under 700, you are in the bottom 7% of people!

This is a determining factor in how much you can afford to pay for something.  In applying for a mortgage, a person with a FICO score of 760 or more will pay $1,000 less in interest per year than someone with a bad credit score, all because they have been determined to be able to afford it.

* We were so impressed with Lexington Law that we decided to become a sponsor and put up this website.

If your score is under 700, then you will need to improve it before applying for a mortgage. My score was in the mid to upper 500′s before I enrolled in Lexington Law. They got my score up to 745. Get a FREE credit consultation with credit repair experts by calling 1-800-298-4297