It's Your Credit - What Is A Good Credit Score?
If you're thinking about applying for credit, it's always a good idea to find out what your current credit score is ahead of time. It will be one of the first things your lender looks at when reviewing your application. And it could well be a determining factor in how quickly your loan is approved. Knowing what your credit score is before you apply will help eliminate any surprises along the way.
So what is a credit score -- and why is it important?
A credit score is simply a number calculated by the three major credit bureaus that indicates how well you handle credit. This is done by reviewing your past credit history and looking at how you are doing with any current debts as well.
The three major credit bureaus are Experian, Equifax, and Trans Union. Each one has it's own method of deciding what your credit score is. Then they use a scoring system to show how good you are at handling credit and paying your bills on time. They all use the same scoring system - FICO - which is an acronym for Fair Isaac Corporation. That's why many people will use the terms "credit score" and "FICO score" interchangeably.
Lenders don't always check all three credit bureaus to decide whether or not to offer you credit. But since Equifax, Experian and Trans Union all use the same FICO scoring system, a score of 720 from one is considered equal to a score of 720 from the other two. That said, it's always wise for you to check your credit report directly from each credit bureau. Mistakes are possible, and you'll want to correct them as soon as possible.
What Is A "Good" Credit Score?
Your credit score can range from 375 to 900 points. The higher the number, the better you are. Getting credit will be easier, and you'll likely get better loan terms as well.
There is no standard scoring system that lenders must use when approving loans. They each have their own guidelines and cut-offs. But here is a general idea of the different ranges credit scores tend to fall in.
If your credit score is 650 and above, this usually indicates very good credit history. This means you will probably find getting credit approval is quick and easy. Another bonus for having very good credit is that the terms of your loan will likely be very good, too.
If your score is between 620 and 650, you are considered to have generally good credit. That said, your lender may ask for additional documentation or explanations before approving large loans or extending a high credit limit. They are simply doing their due diligence, looking for any possible credit risks before final approval.
Chances are good that you will be able to get credit at a good rate and decent terms. It's just that instead of quick and easy, it can take a little longer to get approval.
Don't panic if your credit falls below 620. It doesn't mean you will never get credit. The right lender may still be willing to give you a loan, but you need to accept that your interest rate will likely by higher and terms won't be as good.
So what is a credit score -- and why is it important?
A credit score is simply a number calculated by the three major credit bureaus that indicates how well you handle credit. This is done by reviewing your past credit history and looking at how you are doing with any current debts as well.
The three major credit bureaus are Experian, Equifax, and Trans Union. Each one has it's own method of deciding what your credit score is. Then they use a scoring system to show how good you are at handling credit and paying your bills on time. They all use the same scoring system - FICO - which is an acronym for Fair Isaac Corporation. That's why many people will use the terms "credit score" and "FICO score" interchangeably.
Lenders don't always check all three credit bureaus to decide whether or not to offer you credit. But since Equifax, Experian and Trans Union all use the same FICO scoring system, a score of 720 from one is considered equal to a score of 720 from the other two. That said, it's always wise for you to check your credit report directly from each credit bureau. Mistakes are possible, and you'll want to correct them as soon as possible.
What Is A "Good" Credit Score?
Your credit score can range from 375 to 900 points. The higher the number, the better you are. Getting credit will be easier, and you'll likely get better loan terms as well.
There is no standard scoring system that lenders must use when approving loans. They each have their own guidelines and cut-offs. But here is a general idea of the different ranges credit scores tend to fall in.
If your credit score is 650 and above, this usually indicates very good credit history. This means you will probably find getting credit approval is quick and easy. Another bonus for having very good credit is that the terms of your loan will likely be very good, too.
If your score is between 620 and 650, you are considered to have generally good credit. That said, your lender may ask for additional documentation or explanations before approving large loans or extending a high credit limit. They are simply doing their due diligence, looking for any possible credit risks before final approval.
Chances are good that you will be able to get credit at a good rate and decent terms. It's just that instead of quick and easy, it can take a little longer to get approval.
Don't panic if your credit falls below 620. It doesn't mean you will never get credit. The right lender may still be willing to give you a loan, but you need to accept that your interest rate will likely by higher and terms won't be as good.
About the Author:
It's easy to see that your credit score plays a big part in the type of credit you are able to get. If you find your credit score isn't as high as you'd hoped, don't despair. There are things you can do to improve your credit rating starting today! For more articles on personal credit and how it works, visit http://CreditHelp.ImprovingYourFinances.com
posted by Debt Consolidation Loan at
5:22 PM
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