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  Credit Score

Your credit score (or FICO score) is a number used by lending agencies to determine what kind of a credit risk you are. It is use when applying for credit cards, loans, and mortgages. Higher scores typically allow borrowers to receive a loan at a lower interest rate because the lender believes the borrower will pay back the loan on time.

A credit score is based on your bill-paying history and any late payments, the amount of outstanding debt in your name and how long you have had it, as well as any collection actions that have been taken against you. You can find out your credit score from any of the major credit reporting agencies, such as Equifax, Experian, or TransUnion. Each agency calculates the score differently, and lenders may use any of them in deciding the terms of a loan.

In December 2003, a law was passed giving every American the right to a free credit report every year from each of the three credit reporting agencies mentioned above. Although these reports do not contain your actual credit score, they can assist you with identifying any errors in your credit history so that your score is not calculated incorrectly.