Credit Scores

What is a credit score?
A credit score is a number. It is based on your credit history. But it does not come with your free credit report unless you pay for it.

A high credit score means you have good credit. A low credit score means you have bad credit. Different companies have different scores. Low scores are around 300. High scores are around 700-850.

Do I need to get my credit score?
It is very important to know what is in your credit report. But a credit score is a number that matches your credit history. If you know your history is good, your score will be good. You can get your credit report for free.

It costs money to find out your credit score. Sometimes a company might say the score is free. But if you look closely, you might find that you signed up for a service that checks your credit for you. Those services charge you every month.

Before you pay any money, ask yourself if you need to see your credit score. It might be interesting. But is it worth paying money for? Often, the answer is no. But if you are thinking about a major purchase, such as a new car or a home, it may be wise to find out because the interest rate you will be charged for borrowing money may depend heavily on your credit score. Since banks and auto sales companies typically run credit reports on potential borrowers, they will obtain your credit score, and they will often provide the information to you on request. Whether you find out before making a major purchase or while engaged in doing so, you should make certain that your score accurately reflects your credit history. Credit bureaus make mistakes, and they do not think that they are obligated to do anything about them unless they receive very specific written information contesting the information in their files.

What if I do not have credit?
You might not have a credit history if:

  • you have not had credit card
  • you have not gotten a loan from a bank or credit union

Without a credit history, it can be harder to get a job, an apartment, or even a credit card. It sounds crazy: You need credit to get credit.

How do I get credit?
Do you want to build your credit history? You will need to pay bills that are included in a credit report, and to pay them on time.

  • Sometimes, utility companies put information into a credit report. Do you have utility bills in your name? That can help build credit.
  • Many credit cards put information into credit reports.
  • Sometimes, you can get a store credit card that can help build credit.

A secured credit card also can help you build your credit.

On to the next section!