Credit card companies are raising minimum payments, lowering limits, and closing dormant accounts — all of which can affect how you look to lenders, landlords, and potential employers. So check your score now if you haven’t lately. Here are some things that might surprise you about credit scoring:

1. Anyone can develop an algorithm to give you a credit score. That’s why there are so many sites offering credit reports.

2. The reports are free because they don’t actually contain the score, which is extra. (Conversely, it appears that is you get a free score offer, like I did the other day through Mint.com, it costs extra for the full writeup.) You’re entitled to at least one free report a year and maybe more, depending on your state’s laws. (But one way or another, especially if you want to check all three scores at once, you’re probably going to fork over a little cash.)

3. A genuine FICO score is best, because this is the one that most lenders use. So go to MyFico.com, Equifax, or other reputable financial site that is advertising a genuine FICO score.

4. Lenders pull your credit scores from the three major credit bureaus — Equifax, Experian, and TransUnion — and each will differ. But don’t bother visiting each company’s site. TransUnion and Experian will sell you an in-house score. You can get a report, plus your FICO score, from all three at MyFico.com.

5. Why FICO? Developed and copyrighted by Fair Isaac, a firm based in Minneapolis, FICO was first, and so far has not been dislodged as the industry standard, even though plenty of competing algorithms exist. FairIsaac, in fact, sells other credit scoring models. For more on how credit scoring came to be, check out this history.

Credit scores range from 300-850.

• To get the best rates and offers, you want a score of 760 or higher. (Experts say no one gets an 850.)
• Only 13 percent of us score an 800+, so demand the best treatment from credit card companies if they pull tactics you don’t like. They know the percentages.
• Most of us — 27 percent — fall within the 750-800 range.
• Thirteen percent score below a 600.
• Only 2 percent rate under a 500.

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Tags:   Credit score · FairIsaac · MyFico.com2 Comments