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Credit Cards

Credit Reports and Scores


What is a credit score and why is it important?

A credit score is an evaluation tool that reduces the information in your credit report to a three-digit number that helps lenders make quicker decisions. Credit scores help businesses predict which applicants are likely to repay loans. The better your credit report, and the credit score derived from it, the more likely it is that your credit application will be approved.

A credit score is important because whenever you apply for a mortgage or any other type of loan, a cell phone, a rental apartment, certain types of job, and sometimes even insurance or utilities, your credit score is used to determine whether you are financially trustworthy.

Many companies offering credit allow customers to check their score for free on an ongoing basis. The FICO "open access" program is now offered by 50 lenders including well-known firms such as American Express, Bank of America, Chase, Citi, and Wells Fargo. Discover allows non-customers who provide personal data to get a free score, too. And, Experian's offers access to your score without providing a credit card or signing up for a "free trial" like some websites do.

Learn more about credit scores in Consumer Action’s Credit Reports and Credit Scores and on the Federal Trade Commission’s (FTC) website (here).



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