Quiz: How the Credit Score Affects Your Financial Future

A credit score is a rating of a person’s credit-worthiness determined by a financial reporting company. It tells banks and other lenders whether or not the person is likely to pay back money they lent.

Between 650 and 850. The higher the score, the better. Most people’s score ranges between 600 and 700.

All of the above. Your credit score determines if a company will lend a person money, how much and at what interest rate. It can also have an influence on smaller financial issues. For example, if a cell phone company will require a person to pre-pay or sign a monthly contract for their phone.

FICO is the brand name of a company that reports on financial information, including credit scores about consumers.

Though the exact formula for credit scores varies depending on the credit agency, most agencies consider a variation of elements pertaining to consumer credit, loan and repayment history.

Most financial reporting companies give the most weight to a person’s payment history on money they’ve borrowed, usually about 35 percent. Thirty percent is typically based on the total amount of money they owe, 15 percent on the length of their credit history, and 10 percent for both inquiries about new credit and the types of credit a person has.

Having a good credit score will also ensure a healthy financial forecast. By paying off your balance within a month time and by starting off with a prepaid card, maintaining a high credit becomes a lot easier.