Good credit can make it easier for you to get approved for things like a credit card, car loan, mortgage, or even an apartment lease or job. It can also help you qualify for lower interest rates on the money you borrow and reduce insurance premiums.
So what exactly does "good credit" mean, and how can you get it and hold on to it?
Your credit score indicates how much financial risk you pose to companies thinking of doing business with you. At each credit reporting agency, your FICO score is based on the agency's credit report on you, with the report providing current and past data on your use of credit and your financial reliability. The data is grouped into five categories, and each category is weighted in terms of its relative importance in determining your FICO score.
|Credit Score||What it's Considered||What it Means|
|770 to 850||Very Good / Excellent||Best credit/interest rates are usually available.|
|Above 700||Good||You'll most always be approved for loans with very good interest rates.|
|Mid-600s to 700||Acceptable||You'll most likely receive credit, but not receive the best interest rates.|
|550 to mid-600s||Subprime||Very hard to get a loan. If approved, you will have higher interest rates and penalty fees.|
|300 to 550||Poor||Generally leads to a rejection of credit.|
Stay on top of your scores and reports
Under federal law, you're entitled to get a free copy of your credit report from each nationwide CRA:
To order a free credit report, go to annualcreditreport.com - a site sponsored by Equifax, Experian and TransUnion. According to the Federal Trade Commission, this site is the only authorized source for the free annual credit report available to you by law from each nationwide CRA.
Also, if you're ever denied a credit card or loan, you have the right to get a free report from the CRA used by the lender. Typically, the lender will provide instructions on how to get your report in such an instance.
Here's the contact information for each CRA:
|P.O. Box 740241|
Atlanta, GA 30374
|P.O. Box 2104|
Allen, TX 75013
|P.O. Box 1000|
Chester, PA 19022
Your credit reports don't show FICO scores, although you can get your scores separately (and typically for a fee). When ordering one of your reports at annualcreditreport.com, look for a link for getting your FICO score from the CRA behind the report you're ordering. You can also purchase any of your FICO scores at myFICO.com.
You should consider checking one of your FICO scores each year, ordering it from a different CRA each time. Also, think about checking at least one of your scores (and perhaps the report it was based on) before applying for a new job or large loan. You can ask the potential employer or lender which CRA it uses in screening applicants.
Checking your scores is an easy way to find out what, if anything, you may need to do to improve your standing and it helps keep you in control of your financial well-being.
Beyond staying on top of your credit reports and scores, there are several more things you can do to get and help keep your credit in good shape.
The material is for informational purposes only and should not be regarded as a recommendation or an offer to buy or sell any product or service to which this information may relate. Certain products and services may not be available to all entities or persons.
TIAA-CREF Individual & Institutional Services, LLC, and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products.
A TIAA-CREF brokerage account offers thousands of investment options.