Understanding your credit score can be a long journey filled with ups and downs (literally). Why does it seem like the smallest things can tank your credit score while paying off debt barely makes a dent? And then there are the questions like where to find your credit score, how to properly manage it, etc. While we might need a part 2, 3, and maybe even 4 to fully dive deep into understanding your credit score, here is a little bit of an introduction:

1. What is a credit score?
Your credit score is a number that ranges from 300-850 that allows financial lenders the ability to assess the risk of lending you money (aka credit).

2. Is there more than just one type of credit scoring models?
There are two types: FICO and VantageScore. Many lenders prefer to use FICO despite both models having many similarities. The main difference between FICO and VantageScore is the weight of different factors that show up on your credit report.

3. Is a credit score and a credit report the same thing?
A credit score and a credit report present different data. A credit report is a total look at your credit score and activity. A credit score is a higher level look at your credit health without all the details.

4. What is calculated in a credit score?
Your credit score takes into account your payment history, the total amount of debt you have compared to the amount available to you, length of credit history, how often you apply for credit accounts, and the different types of credit lines you have (i.e. credit cards, loans, etc). Depending on whether you are looking at FICO or VantageScore, each of these things will rank different in importance.

While we could go on for pages about the nuances of understanding your credit score, hopefully this brief introduction will help you get a good understanding of your credit score and everything that goes into it.

Reach out with any questions you may have! Until next time!

Get in touch today!

Tim Erickson
P: (652) 451-2273
E: tim.erickson@goluminate.com
W: www.TimEricksonMortgage.com

Mark Henderson
P: (651) 398-3477
E: mark.henderson@goluminate.com
W: www.MarkHendersonMortgage.com