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Is Having Perfect Credit Just About Having a High FICO Score?

Lynnette Khalfani-Cox, The Money Coach by Lynnette Khalfani-Cox, The Money Coach
in Credit Scores
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If you have never seen your credit reports, or been told your credit scores, you may have only a rough idea of your standing. If so, that’s a big mistake.

I don’t want you to have hazy or vague knowledge about such a very important topic. I want you to be crystal-clear about your credit rating and know what specific actions you can take to maximize and even profit from it.

Toward that end it’s important to explain the most commonly used credit scores. FICO is an abbreviation that stands for Fair Isaac Corporation. Fair Isaac is a publicly traded, Minneapolis-based company that creates credit scores for tens of millions of Americans.

While there are other credit scores out there (such as VantageScore and the Experian PLUS score, which I’ll tell you about later in this book), FICO scores are the most widely used by U.S. banks, mortgage companies, credit-card issuers, and auto lenders.

About 90% of the top banks in America use FICO scores. So throughout this book, when I refer to “credit scores,” I’m generally referring to FICO scores, unless otherwise noted.

FICO scores range from a dreadful 300 points to a pristine 850 points. The higher your scores, the more attractive you are to banks and other creditors, because your FICO score is designed to predict the chances that you will miss a payment or default on a debt.

People with low FICO scores are riskier to banks because those individuals are statistically less likely to repay a loan than are people with high FICO scores. That’s why lenders are quicker to say “Yes” to the latter group and to offer people with top-notch credit scores better deals overall.

Excerpted from Perfect Credit

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All information on this blog is for educational purposes only. Lynnette Khalfani-Cox, The Money Coach, is not a certified financial planner, registered investment adviser, or attorney. If you need specialty financial, investment or legal advice, please consult the appropriate professional. Advertising Disclosure: This site may accept advertising, affiliate payments or other forms of compensation from companies mentioned in articles. This compensation may impact how and where products and companies appear on this site. AskTheMoneyCoach™ and Lynnette Khalfani-Cox, The Money Coach® are trademarks of TheMoneyCoach.net, LLC.

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