Your credit score is an up-to-date snapshot of your financial life. In the United States, there are three major credit bureaus that compile and issue credit reports for consumers. Virtually every American adult has a so-called FICO credit score.
FICO credit scores range from a rock-bottom reading of 300 to a pitch-perfect score of 850. Of course, the majority of Americans fall somewhere in between these two. Scores below 620 are generally considered to be fair or poor. Although 620 is not a hard-and-fast benchmark, scores in the mid-600s or higher are generally regarded as acceptable or good. Scores greater than 750 are considered to be excellent.
When you apply for a mortgage, car loan or credit card, your lender will obtain your credit score from one of the three major credit bureaus. It’s important to remember that each bureau maintains a slightly different record of your credit history. As such, your credit score will vary depending upon which bureau your lender uses. Unless there’s a major piece of information missing from one or more of these bureau’s records, your three credit scores are unlikely to be significantly different.
However, your credit score will fluctuate based on the credit-related decisions that you make over long periods of time. There are many different actions and non-actions that can positively or negatively affect your credit. If you wish to improve your credit score, it’s crucial that you understand how each of these decisions can affect your financial reputation.
If you’re reading this, there’s a good chance that you’re grappling with a significant amount of unsecured debts. These debts often come with high interest rates and relatively low spending limits. This means it can be especially devastating if you use unsecured debt such as credit cards and personal lines of credit irresponsibly. As your debts mount and you consider taking drastic action to keep your financial house from collapsing, you’ll want to consider how each of your debt-relief options could affect your credit score over the long term.