Archive for the 'Credit Score' Category

What is a Good Credit Score Range?

A good credit score is important for many reasons; it determines how much you will pay in interest on loans and whether you will be able to get a loan or not. If you have a poor credit score you will pay more on loans than someone with a good credit score. Many people wonder, what is a good credit score range?

There are many factor that go into calculating your credit score, like number of late payments, length accounts have been open, bankruptcies, inquiries, and several other factors. This credit score is called a FICO score and it is compiled by Fair Isaac and Company.

There are three major agencies that monitor your debts and payments; they organize the facts about your history in this department and tally a score. These companies are independent from each other, so the information that each one has can be different.

For the same reason, you may have different credit scores issued by each company. Different lenders choose to work with different credit reporting companies. Some lenders work with only one, while others work with all three and consider all three reports and scores in the loan decision.

FICO scores run between 300 and 850 points. Because there is only 550 points between the lowest score and the highest score, small changes can have a big impact on your loan options and other aspects of your life.

A good credit score range is typically between 760 and 850. A credit score in this range will allow you to get the lowest interest rates and qualify for the best loan programs available. A score range between 720 to 759 will still normally qualify you for good interest rates and you will be able to qualify for most loan programs. If your credit score is between 680 and 719 you may start to have more complications when applying for credit, but you should still be able to qualify for loans.

A credit score range of 600 to 639 will present you with a lot of complications. This score range will lead to paying higher interest rates or not being able to secure a loan at all. A score in this range needs some help and should be given attention.

A score below 600 is considered poor and must be worked on and improved upon. A score this low will often prevent you from getting a job because employers believe that if you are that bad with your finances you must be an irresponsible person.This may or may not be true, but  a bad credit score can really make things difficult outside of just qualifying for credit. It’s also common for your auto insurers to consider credit ratings when underwriting insurance.

It is incredibly important that you check your credit report and score frequently. Keep up on any changes and have mistakes corrected as soon as you find them. Credit history has a significant impact on your life and you must be vigilant about your own reports. Your credit score is quite important and it is very necessary to keep it in a good credit score range. You can keep your score up or improve a bad score by paying bills on time, avoiding bankruptcy, and keeping credit card balances under 49% of the limit. There are many ways to improve your credit.

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.

How Credit Scores are Calculated

Credit scores range anywhere from 300 to 850. The formula, created by Fair Isaac, is used to calculate your credit score. Here is how it’s determined:

  • 35% of it is based on your payment history. The score is affected by how many times your bills have been paid lately and how many times you have had bankruptcies in the past. When collections and bankruptcies happen also play a role, the more recent, the worse it will be more your overall score.
  • 30% of this score is based on your outstanding debt. This part includes the amount you owe on your car, home or loans as well as the number of credit cards you have and their credit limits. The main rule here is to keep your card balances at 25% or even less of their limits.
  • 15% of the credit score is based on the length of time you have had such credit. The longer you had good established credit, the better it is for you overall credit score.
  • 10% of the score is based on the amount of inquires on your report. For example, if you currently have a lot of credit cards or loans, you will have a lot of inquires on your credit report. These inquires are generally bad for you since it means that you are in some financial trouble and thus need the funds to get out of debt. Moreover, the more recent those inquires are, the worse effect it has on your credit score.
  • 10% of the credit score is based on any other types of credit you have now. These are the number of loans you have and the number of credit requests.

Introduction to Credit Scores

People want to get credit for a lot of reasons – to purchase a house, car, or even obtain a student loan. But, did you know that there is a unique number, which determines whatever you can get those things or not and how much it will cost you? Moreover, that three digit number is called a credit score.

First off, your credit report determines your credit history: how you have paid your bills, how much open credit you currently have and everything else that might effect your credit score. Your credit score is so powerful that it sums up all of your credit history only into three numbers. This three digit number is used to help lenders decide whatever they should give you a loan or not.

Credit score helps any lender identify possible level of risk they need to assume when they lend you money. Although, the same could be done by reviewing you credit report, credit score tends to more more accessible and easier to interpret. The system gives points based on the information provided in your credit report. With this information, lenders can easily determine if someone will repay a loan or not as well as make payments on time.
The most commonly used credit scoring method by lenders is FICO. The major three national credit bureaus have their own versions of the FICO. For example, Equifax has the Beacon system, TransUnion has the Emperica system, and Experian has the Experian / Fair Isaac System.

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