The score I am referring to is not your grade point average back in high school, and it’s not how many times you called in sick at work. It’s a score that will be following you around through thick and thin. Think of it like a marriage that doesn’t have a 55% divorce rate. It’s your FICO score; which is an acronym for Fair Isaac Credit Organization. The higher your FICO the less you will have to pay on any kind of credit services such as: credit cards, mortgages, and personal loans. A FICO score represents your credit history that is monitored by three separate credit bureaus (TransUnion, Experian, and Equifax).

The highest score possible is an 850 while the lowest is a 300. The FICO score is roughly put together using this formula: 35% punctuality of payment in the past, 30% capacity used: the ratio of current revolving debt (credit card balances, etc.), total available revolving credit (credit limitations), 15% length of credit history (how long credit you have been using credit), 10% types of credit used (installment, revolving,), and 10% recent search for credit and/or amount of credit obtained recently.

Knowing your score before you apply for a loan can save you hundreds of dollars monthly, and thousands yearly. Here’s a quick example of a 30 year fixed $100,000 mortgage having two different credit scores: A score of 760 and above, your avg. payment would be 632.07(using 6.5%), but having a credit score of 620-639 your avg. payment would be 740.05(using 8.09%). A difference of nearly $1300.00 a year. When you apply for a loan this score will cut your shopping time by 75% because you will know a ballpark range of the interest lenders will offer you. If you don’t know your score find it out now. Go to myFICO and start saving money!