When you apply for credit, one of the first things a lender will check is your credit score. If you know what your credit score is before you apply, you'll have a better idea of what to expect in the loan process.
So what is a credit score -- and why is it important?
Your credit score is a number the credit bureaus use to rate just how credit-worthy you are. They look at both your past credit history and how well you are handling any current debt you may have.
The three major credit bureaus (Equifax, Experian, and Trans Union) all have their own way of determining your credit score. But they each use the same standard scoring system to show how credit worthy you are. It based on FICO, an acronym for Fair Isaac Corporation. That's why you'll often hear people use the term "FICO Score" when talking about credit scores.
The truth is, lenders won't always ask for credit reports or credit scores from all three credit bureaus when you apply for a loan. Fortunately, since the "big three" all use the same FICO system, a score of 680 from one is thought to be the same as a score of 680 from the other two credit bureaus. Even so, it's a good idea to review your credit report from each one, as sometimes mistakes are made. When that happens, you should contact the credit bureau to have them corrected.
Where Do You Fall - 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.
While each lender has his own criteria to follow, here is a general guide that shows how credit scores tend to rank.
A score of 650 or better usually means getting credit approval will be simple and quick. It shows that you have a very good credit history. As I said earlier, this also means you will probably have very good terms on any loan you get - another reward for handling your past debt responsibly.
Scores between 620 and 650 are considered average. This means your credit is basically good. If you fall into this range, lenders will tend to look for any possible credit risks before approving a high credit limit or large loan amount. You may find you have to provide additional documentation and explanations when applying.
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.
If your credit score is below 620, this doesn't necessarily mean you won't get credit. But you should realize that the interest rates and terms of your loan will probably be less desirable, due to your low credit rating. - 15224
So what is a credit score -- and why is it important?
Your credit score is a number the credit bureaus use to rate just how credit-worthy you are. They look at both your past credit history and how well you are handling any current debt you may have.
The three major credit bureaus (Equifax, Experian, and Trans Union) all have their own way of determining your credit score. But they each use the same standard scoring system to show how credit worthy you are. It based on FICO, an acronym for Fair Isaac Corporation. That's why you'll often hear people use the term "FICO Score" when talking about credit scores.
The truth is, lenders won't always ask for credit reports or credit scores from all three credit bureaus when you apply for a loan. Fortunately, since the "big three" all use the same FICO system, a score of 680 from one is thought to be the same as a score of 680 from the other two credit bureaus. Even so, it's a good idea to review your credit report from each one, as sometimes mistakes are made. When that happens, you should contact the credit bureau to have them corrected.
Where Do You Fall - 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.
While each lender has his own criteria to follow, here is a general guide that shows how credit scores tend to rank.
A score of 650 or better usually means getting credit approval will be simple and quick. It shows that you have a very good credit history. As I said earlier, this also means you will probably have very good terms on any loan you get - another reward for handling your past debt responsibly.
Scores between 620 and 650 are considered average. This means your credit is basically good. If you fall into this range, lenders will tend to look for any possible credit risks before approving a high credit limit or large loan amount. You may find you have to provide additional documentation and explanations when applying.
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.
If your credit score is below 620, this doesn't necessarily mean you won't get credit. But you should realize that the interest rates and terms of your loan will probably be less desirable, due to your low credit rating. - 15224
About the Author:
As you can see, your credit score will help to determine 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
