Dollars and Sense: Credit Score Challenge
by Staff
Your credit score plays a large part in whether you can buy a house or car. In certain circumstances, it even affects whether you can get a job. But where does the number come from?

A credit score is:

  • a three-digit number summarizing the state of your credit
  • an alphabetical score grading your creditworthiness
  • a numerical score reporting how much money you owe

A credit score helps a lender determine:

  • how much money you owe
  • how much money you make
  • whether you're a good financial risk

The main type of credit score is called FICO because:

  • It stands for "Finances, Income, Credit, Outgo."
  • It originated with Fair Isaac and Company.
  • It's an acronym for "fiduciary company," or a company entrusted to protect another's assets.

Credit scores range from:

  • zero to 100
  • 300 to 850
  • 100 to 1,000

The biggest factor in your credit score is:

  • whether you pay your bills on time
  • how much debt you have
  • how long you've had credit

You can improve your credit score by:

  • closing any unused lines of credit
  • reviewing your report regularly and correcting any errors
  • refusing to use credit for any purchase

Your credit score affects:

  • whether you can get a loan
  • your interest rate
  • both A and B

Insurers have used credit scores to determine insurance rates because:

  • People who have good driving records also have good credit.
  • Research shows a correlation between lower credit scores and increased insurance claims.
  • People who have good finances are in better health.

To keep your credit score high, you should keep old credit accounts active because:

  • You may need the money someday.
  • The higher your total credit limit, the higher your score.
  • The length of your credit history affects your score.

Inquiries from lenders to the credit bureau will:

  • raise your score
  • lower your score
  • not affect your score