The FICO score is a mathematical calculation the measures your probability to repay a loan

Measurements are base upon a number of factors that include:

• your current outstanding debt
• places and the number of times you have applied for credit
• the kind of credit you have taken out in the past
• late payments in 30, 60, and 90 day increments
• over extension of your credit lines
• liens
• garnishments
• bankruptcy

Lenders often use the FICO score when reviewing an applicant's request for credit

an applicant with a high FICO score will likely receive instant approval with better than normal rates and terms — which means lower cost when you borrow money


view more information about the FICO credit score:
http://www.myfico.com

FICO Scores: 700 and up

• Scores 700 and up are considered excellent.
  
• Most lenders will categorized this group as A rating.
  
• Scores within this group will have access to the best interest rates and terms.
  
• About 60% of the U.S. population falls within this credit range

FICO Scores: 600 to 699

• Scores 600 to 699 are considered good credit.
  
• Most lenders will categorized this group as B rating.
  
• Scores within this group will have access to good interest rates, but may not qualify for the very best interest rates and terms.
  
• About 27% of the U.S. population falls within this credit range.

FICO Scores: 500 to 599

• Scores 500 to 599 are considered risky credit.
  
• Most lenders will categorized this group as C rating.
  
• Scores within this group may still qualify for a loan, but may have to pay at least two percentage points or more higher interest rates than the group in the excellent category.
  
• About 12% of the U.S. population falls within this credit range.

FICO Scores: 499 and less

• Scores 499 and below are considered very risky credit.
  
• Most lenders will categorized this group as D rating — which means the applicant may have foreclosure, liens, and credit judgments.
  
• Scores within this group may still be eligible for a loan, but may have to pay at the maximized rates determined by State and Federal regulations.
  
• About 1% of the U.S. population falls within this credit range.

Your credit report will maintain the following information:

• Your current outstanding debt
• Places and the number of times you have applied for credit
• The kind of credit you have taken out in the past
• Late payments in 30, 60, and 90 day increments
• Over extension of your credit lines
• Liens
• Garnishments
• Bankruptcy
  
  Credit bureaus report negative information for seven years and bankruptcy information for ten

Who Has Access

By signed authorization through an application or other contractual agreement, the following parties may gain access to your report:

• Banks, credit unions, finance companies, other lenders
• Retailers, department stores, credit card companies.
• Landlords, utility companies, phone companies.
• Hospitals, doctors, dentists, insurance companies.
• Car dealers, mortgagers.
• Investigators, lawyers, courts.
• Any party who can offer just cause and/or has access as a member of a credit reporting agency.

Why Check Your Report

• To avoid paying higher interest rates
  on your car and home mortgage if your credit report shows some questionable activity.
  
  Did you also know that you may be charged higher premiums on insurance if you have questionable credit?
  
  And you also might be surprised that many employers run credit checks on potential job applicants and/or for promotions.
  
  Your goal is to ensure that your credit report reflects accurately your credit and financial management skills.

1: Check for Errors and Inaccuracies

About 1-in-4 credit reports contain errors that can affect a credit decision. These errors may include human input error, incorrect information reported about your account, or addition of some other account information that has a similar name or SSN number to yours.

You should check you report at least annually and prior to submitting a home mortgage or other application.

2: Tracking Payments

The typical household will during one month make 1 mortgage payment, 4-5 credit card payments, 1-2 student loan payments, 1-2 auto loan payments, 4-5 utility payments, and the list goes on.

Multiply this number of payments by 12 and you can imagine the probability that 1 or more payments were recorded incorrectly by your creditor.

You should check your credit report to make sure that your payments has been properly recorded.

3: Identity Theft

This is probably the main reason why you should check your report regularly. Identity theft occurs when someone assumes your name and social security number to open credit accounts, divert card statements to another address, and drive up debts.

Identity theft can destroy your credit and trap you into a complicated process to clear your good name and background.

Checking your credit report regularly can help prevent identity theft. It shows credit activity being made in your name. You can monitor over time whether a particular inquiry or credit account was open without your authorization.

We have more information about ID Theft at our parent site: SayLending.com.

4: Inquiries

Every time you make a request for credit or enter into some contractual service, your lender or service provider may check your credit, which places an inquiry on your credit report. Multiple inquiries over a short period of time can lower your credit rating.

Your credit report will show the inquiries made to your report. It is important to know who has made an inquiry, whether such inquiry was authorized by you, and most importantly, whether any of the inquiries are related to Identity Theft.

5: Credit Fraud — Unauthorized Charges

A credit report will show the credit accounts that are still open but with limited or zero activity.

Question: if someone confiscated your credit account, how would you note any activity to the account if the creditor has on their records your previous address? Reviewing your credit report allows you to catch new activity on accounts that may be fraudulent.