Credit Score Basics

Chances are that you've heard a lot about your credit score lately. The economy has faltered, belts are getting tighter, and people are a lot more conscious about the debt they're accruing. If you watch any amount of television, you've likely seen quite a few commercials advertising services that tell you your credit score, or offer to help rebuild it. But you may be wondering, “what, exactly, is my credit score?” A lot of people have a passing awareness of it, but may not really know what a credit score communicates or how.

What Is a Credit Score?

Your credit score is a numerical representation of the risk you present to a lending institution. This may sound arcane, but it's actually pretty simple. A credit score is a number that tells a bank how likely you are to repay the loan, with the higher the credit score signifying that you are considerably more likely to be a good investment for them, rather than a risk. The most widely used credit score rating system is called FICO, and it ranges from 300 at the low end to 850 at the high end. So, if you have a credit score of 780, banks are more likely to extend you larger loans and more beneficial terms if you had a credit score of 450.

What Affects My Credit Score?

Simply put, your credit score is affected by your credit history. If you have consistently paid back your loans on time, you will have a good credit score. Obviously, the inverse is also true. The best way to build a good credit score is to make sure you always pay off your loans on time, from credit card bills to mortgage loan payments.

Contact Us

If you have any questions about how your credit score will affect your ability to obtain a favorable mortgage loan, contact the Maryland mortgage modification lawyers of Chaifetz & Coyle, P.C., by calling 410-964-5573 today.