Archive for November, 2009

What’s A Good Credit Score?

It’s difficult to gain approval with credit cards or loans if your credit is weak. Credit scores are given by credit bureaus such as Experian, Trans Union, and Equifax. These credit bureaus issue three letter scores to all people with active and inactive credit or outstanding loans. This score gives potential lenders insight into your credit history. For every delinquent or outstanding balance, your score will go down. All credit obligations that are met on time allow your score to increase.

An excellent credit score ranges from 750 and up. This score gives the title of A-1 credit to a borrower’s credit history. To receive this high rating, all credit must be in good standing with balance paid on time. Having too much credit can look bad even if all accounts are current. It only takes a few credit accounts to establish A-1 credit.

So, what’s a good credit score you ask? A good credit score would have to be close to 700. Anything lower than 700 is considered fair. The highest a credit score can reach is 850. It’s not often that lenders and credit card companies see this figure. Someone with credit this excellent can often walk away with whatever loan they want.

It’s almost impossible to receive the same credit score from each credit reporting agency. Agencies use different scoring software. Therefore, the score generated by each agency will differ by a few points. So if you receive a good credit score of 750, the other agencies may report higher or lower.

The credit scoring method is used in determining if an applicant is a lender risk. Lenders, creditors, and mortgage companies will reject your request for credit if your score is low. A good score indicates that an individual is likely to fulfill the terms of the loan. Good credit scores can also make it simple to obtain low interest rates. When applicants with good credit scores are approved for credit, it’s usually at a low interest rate.

What’s a good credit score is a common question because a good credit score is seen by very few Americans. A number of circumstances can occur that will force one to live on their credit. Once you start spending more money then you generate your credit score will suffer. A good credit score can only remain good if the credit holder is wise when it comes to spending. Neglecting your credit score is hard to recover from. Points decrease each day an account is past due. That is, if the credit company reports it, they usually do.

Other factors that will affect a good credit score, is a low credit balance. If you have 3,000 on a credit card, but owe 1,500, it will impact your credit score. Your available credit line should always remain 70 percent above the balance. Your credit score will be affected by the remaining credit line if it’s too low.

Bankruptcy’s, repos, and errors will also cause drastic changes in a good credit score. Errors on a credit report can be corrected once spotted. You can view your credit report by requesting a free copy once a year from the three major credit reporting agencies. This doesn’t provide a score, but rather a report. It’s something that should be done consistently to make sure there are no mistakes or credit problems you may be unaware of. Once you are made aware you can get any issues fixed and be on your way to a good credit score of your own.

What Is Considered A Good Credit Score?

You may want to buy a house or a car. You may even want to get a credit card or apply for one with a lower interest rate. Knowing your credit score is a very prudent step and smart idea. But in the days of the tight economy what is considered a good credit score? Knowing exactly what a credit score is and what’s considered a good credit score is something we all need to know.

The credit scoring system can be confusing. It is not a regular scale and can vary. So knowing your real score is important. The scoring system can run between three hundred and nine hundred depending on who is doing the scoring. While this may be confusing, a credit score, also known as a FICO score, is pretty much looked upon in the same manner.

Scoring is done by the FICO system from the Consumer Federation of America and also Fair Isaac among other agencies. It is a mathematical way to determine a consumer’s value of risk when loaning money. It is calculated by your past credit history, your current history, the amount of debt you owe to current creditors and how long you have been a credit user.

What experts agree on is that a score of 620 and above is considered a good score. It’s not a perfect score, but it is high enough where you are a decent risk. Anything below this level is considered a person to be a risky investment and you will have a hard time getting anything until you raise your score.

A score of 640 and above is considered an okay score for investors to trust. The same is true with those who score up around 680 on their credit rating. But to effectively be approved for items such as a house you will need a higher score so that to easily obtain a loan.

If you have a score of 690 or above you can be assured that a loan will be underwritten for you for a home purchase. This is the basis that many companies require as minimum. You’ll also need verified income and the like to qualify for a home purchase. If you don’t have the salary necessary to afford a home your credit score alone can’t get you financed. You can get a home purchased, however if you want to ask someone with a higher rating to co-sign for you. Many parents are helping their children buy houses by utilizing their high credit ratings to purchase homes that would otherwise be unattainable.

A credit score of 700 and above is considered an excellent credit score. These show lenders that the person with this score pays their bills on time, has established credit history in a positive nature and is an overall great risk to lend money to. Numbers above this 700 score get even better in the golden arena of credit scoring.

People with these higher scores also have bargaining power when it comes to negotiating a better interest rate on credit cards and other purchases such as homes and vehicles. You can literally have companies fighting each other to do business with you because they know you will be an excellent risk. So, now that you know what is considered a good credit score you can take the necessary steps to get there if you are not already.