Take the Credit Score Quiz

Date October 27, 2008

credit scoresHave you ever applied for a loan and you didn’t get that extremely low rate that was advertised? That’s probably because of your FICO score. Typically, financial institutions partially base credit decisions on your FICO, or Fair Isaac and Company, credit score. Credit scores range from 300-850, the higher number being the best. The higher your credit score, the better rate you’ll get on a loan, and the more money you’ll save on monthly payments.

How much do you know about credit scores? What you don’t know may hurt you financially, so take this little true-or-false quiz to gauge your knowledge. Then visit My FICO to learn even more.

Mark each statement True or False (don’t peek at the answers below until you finish!):

  1. You can have a single credit score. _____
  2. You can obtain your credit score free of charge, once a year. _____
  3. Your credit score is based on only five factors: your payment history, the amount you owe, the types of credit you use, the length of your credit history, and the amount of new debt. _____
  4. When you pay off a credit card, you should leave the account open. _____

Answers:

  1. False. The three credit bureaus – Experian, Equifax and TransUnion - each calculate their own score. If the information in your credit history is consistent, the three scores will be within a few points of each other.
  2. False. You can obtain your credit reports free of charge, but there is a small fee for learning your credit score.
  3. True. Other factors, such as your age and employment history are not considered.
  4. True. Surprisingly enough, closing the account could hurt your score.

Why is it important to know your credit score? If it’s on the low side, there are steps you can take to raise it. If you know your score when you are applying for a loan, you can make sure the financial institution is charging you the correct interest rate, depending on their rate structure. Having as much knowledge as you can when you apply for a loan is optimal.

You can get a free copy of your credit report here. Knowing your credit score before you shop for a loan is to your advantage, and having a high credit score can help you get the best rates on loans.

To find out your credit score and to see how you can improve it, if necessary, go to MyFICO.com today!

Questions or Comments? E-Mail me at blogger@matadorsmoneymatters.com.

Category Posted in Loans

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