Skip to Content
 COVID-19 Information from ACCC

Credit Score - The Magic Number Explained


What is a Credit Score?

Credit score is a three-digit number generated by a mathematical algorithm using information in your credit report. Lenders use credit scores to determine who qualifies for a loan, the interest on a loan and the credit limit.
"90 percent of all financial institutions in the U.S. use FICO scores in their decision-making process." - 

Where can I get my credit score?

There are three main credit bureaus that collect and maintain the information that determines individuals Credit Scores: Equifax, Experian, Trans Union 

Why do credit scores vary between the three bureaus?

Each of the agencies:

  • Report or receive information on different dates
  • Use different scoring models or algorithms
  • Some lenders or billing agencies don’t report to all three agencies 

The 5 factors that make up a FICO credit score:

Payment history: (35 percent) -- Account payment information, including any delinquencies and public records.
Amounts owed: (30 percent) -- How much is owed on all accounts. The amount of available credit being used on revolving accounts is heavily weighted.
Length of credit history: (15 percent) -- How long ago accounts were opened and time since account activity.
Types of credit used: (10 percent) -- The mix of existing accounts, such as revolving and installment.
New credit: (10 percent) -- Your pursuit of new credit, including credit inquiries and number of recently opened accounts.
Personal or demographic information such as age, race, address, marital status, income and employment don't affect the score. 

What's a Good Credit Score?

Most credit scores operate within the range of 300 to 850. Higher the score, Lower the Risk!
Excellent Credit: 750+
Good Credit: 700-749
Fair Credit: 650-699
Poor Credit: 600-649
Bad Credit: below 600
Remember, lenders all have their own definitions of what is a good credit score. 

Why should you care about Credit Scores?

  1. Determines the ability to get a mortgage: If you have a bad credit history, your home loan maybe denied.
  2. It is a sign of financial responsibility: Higher scores can mean lower premiums on insurance etc.
  3. Means to obtain lower Interest Rates: Lower Credit scores trigger higher interest rates on loans.





American Consumer Credit Counseling (ACCC) is a non profit credit counseling agency offering services such as debt advice, debt consolidation programs, and consumer bankruptcy counseling. We have provided thousands of families with financial counseling and helped them with consolidating bills and paying off credit cards. For consumers in need of bankruptcy counseling, ACCC is approved by the Department of Justice to provide both pre bankruptcy credit counseling and post-bankruptcy debtor education.

American Consumer Credit Counseling - Consolidate Debts - Better Business Bureau American Consumer Credit Counseling - Consolidate Debts - Mass Housing Approved National Industry Standards for Homeownership Education and Counseling American Consumer Credit Counseling - Consolidate Debts  - Council on Accreditation American Consumer Credit Counseling - Consolidate Debts  - NFCC Member