What it is:
A FICO score is a measure of your borrowing habits and credit history against other borrowers with various types of financial situations. This information is provided to lenders and they take this info to determine whether or not they are going to grant you credit.
What determines it:
The following 5 items identify good from not-so-good credit:
- Failure to make timely payments - late.
- Credit usage - more than one card and the balance compared to the limit.
- Credit history - length of time.
- Credit applications - number of loans, credit cards, etc... applied for.
- Variety and amount of active credit lines.
What is considered good:
Once all info has been compiled a number is associated between 300-800. Anything over 660 is great, between 620-660 is fair, but below 620 may not be considered so great.
Why is it important:
Your chances of getting a loan or a credit card are very limited, having good credit increases your options.
How you can build it:
Start small by applying for credit with local department stores, banks or credit unions that will report your credit information to the major credit bureaus for you to build up a history. You may need a cosigner for your first loan or a security deposit for your first credit card.
Are there laws to protect me:
You cannot be discriminated against, receiving credit is strictly based on your previous credit history. Consumer rights can be found under the Equal Credit Opportunity Act.
How much does it cost to obtain:
Costs may vary by state and depending on which bureau you are requesting it from.
How long does a bankruptcy show up:
Bankruptcy will be on your credit report for up to 10 years.
Can I just get a new SS#:
No, it is illegal to use a different SS# to apply for credit, and is essentially a criminal offense.