Applying for a Credit Card - Why You Need a Good Credit Score Part 4

The last post said that having a credit score above 720 will help you get the best interest rates. It will also help you get the best credit card deals.

If you have a score below that, don't worry. It is possible to raise your credit score in a short amount of time. Meanwhile, some lenders will work with you if you have credit scores in the 600s. Some lenders will look at your entire credit report while others will accept or reject your loan application based solely on your credit score.

Where Does Your Credit Score Come From

The credit score is based on your credit report, which contains a history of your past debts and repayments. Credit bureaus use computers and mathematical calculations to arrive at a credit score from the information contained in your credit report.

Each credit bureau uses different methods to do this (which is why you will have different scores with different companies) but most credit bureaus use the FICO system. FICO is an acronym for the credit score calculating software offered by Fair Isaac Corporation company.

This is by far the most used software since the Fair Isaac Corporation developed the credit score model used by many in the financial industry and is still considered one of the leaders in the field.

In fact, credit scores are sometimes called FICO scores or FICO ratings, although it is important to understand that your score may be tabulated using different software.

Over the next few months I'll be posting a series on how to improve your credit score legally. If you would rather not wait for the whole series, you can download a book I highly recommend and read it through today. You can find out more information about it here: Credit Score Bible