Understanding Your Credit
Your credit score and history are very important. They are what is used by employers, landlords, cell phone companies, creditors, utility companies and many more to determine the rates you will pay, whether you can rent or buy your home, and a host of other things that allow you to live your life. Your score, called the Fair Isaac corporation, or FICO score, is combined with your credit history and used to figure out how likely it is that you will pay your debts in the future. Your report contains all sorts of information, such as credit score, past history of payments and delinquencies, and number of current debts and credit cards, that helps verious debtors find out about you, and about whether you are a good risk for them to take. Understanding what is a good credit score is very important, and the first step in that process is learning the credit score range.
Your credit score can mean the difference between being able to live your life like a normal human being, or not being able to live at all. Insurance, your home, and a job are all essential things that can be affected by your score. The credit score scale and where you sit on it are essential. The credit score range goes from 300 all the way up to 850. 85% of the population of the U.S. has a score somewhere between 550 and 800, so falling somewhere in this range, preferably on the higher range, is a good thing. It is generally accepted that if you have a score over 700 you are in good shape, and below 660 is where there start to be problems with your place on the credit score scale.
Here is a basic definition of each of the groups in the credit score scale that can be used to determine what is a good credit score:
500-579 – Very poor score. In this range, if you apply for a loan you will most likely get the highest rate on your loan that the creditor has, if you even get the loan at all.
580-619 – Poor score. You will probably get approved, but your rate will be very high.
620-659 – Fair score. You have a good chance of approval with middle-of-the-road rates.
660-699 – Good Score. You’ll get above average interest rates, and chances are excellent that you’ll be approved.
700-759 – Great score. You can get above-average rates, and an overall great loan.
760-850 – Excellent Score. You’ll get the creditors best rates and best terms possible.
So you now know how the credit score range works and what is a good credit score, but you’re probably wondering how they come up with this score. There are three different credit agencies, and all of the creditors that you come in contact report your activity to all three. They report both on time and delinquent payments. While not the only thing that determines your scores, this is the most important. Another thing to remember is that your score is constantly changing; every bill you pay or don’t pay will make your score rise or fall, and you will end up lower or higher on the credit score scale.
Paying bills on time will slowly improve your standing on the credit report scale. You can also examine your reports for errors, and contact the individual agencies to fix the problems. Now that you know the answer to the question “What is a good credit score?” you can go about fixing it.
There is a federal law that allows you to check your score with the three main agencies once a year, and also if you get turned down for a loan, fail to get a job, or are turned down by any other type of creditor. Your standing in the credit score range can be helped, but you need your credit reports first.
Understanding the credit score range is not enough. Knowing what is a good credit score is also not enough. If you get your yearly credit reports you can figure out what needs to be done to fix your credit and move you up on the credit score scale.