Tag Archives for " credit scores "

What is My Credit Score: FICO® Score Estimator

“Wondering what your credit score is? Let the FICO Score Estimator help. Check it out below now!”

The Question

How FICO Scores Work
When you apply for credit – whether for a credit card, a car loan, or a mortgage – lenders want to know what risk they’d take by loaning money to you.

FICO scores are the credit scores most lenders use to determine your credit risk. You have three FICO scores, one for each of the three credit bureaus – Experian, TransUnion, and Equifax. Each score is based on information the credit bureau keeps on file about you. As this information changes, your credit scores tend to change as well.

Your 3 FICO scores affect both how much and what loan terms (interest rate, etc.) lenders will offer you at any given time.

Taking steps to get your FICO scores in the higher ranges can help you qualify for better rates from lenders.

Higher FICO Scores = Lower Payments
The higher your FICO® scores, the less you pay to buy on credit – no matter whether you’re getting a home loan, cell phone, a car loan, or signing up for credit cards.

You can roughly estimate your actual credit score with this free score estimator from FICO®, the most trusted name in credit scoring. Here’s how it works: Answer these ten easy questions and we’ll give you a free estimated range for your three FICO® scores.

What do you mean I might not have a score?
You won’t have a credit score unless you’re older than 18 and you’ve had a credit card in your own name for longer than six months. So, if you’re young or you pay with cash, you likely don’t have a score. Or, if you’re young and have only had a single credit card for a short period of time, you may not have a score yet either. So go ahead and answer the questions and get an idea. It’s free, it’s easy, and you don’t have to give up any personal information.

1. How many credit cards do you have?
I have never had a credit card
1
2 to 4
5 or more

2. How long ago did you get your first loan?
(i.e., auto loan, mortgage, student loan, etc.)
I have never had a loan
less than 6 months ago
between 6 months and 2 years ago
2 to 5 years ago
5 to 10 years ago
10 to 15 years ago
15 to 20 years ago
more than 20 years ago
More at FICO® Score Estimator

Still asking “What is my Credit Score?”, then watch this video:

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Credit Score Ranges: What’s a Bad Credit Score

“When we talk of credit score ranges, what comes to mind is a good credit score. But what is a bad credit score? Read below to find out!”

Different Credit Score Ranges

Most people have a gut feeling about their credit – it’s either great, good or bad. But what is a bad credit score really?

First, it’s important to understand that there are many different credit scoring models out there and each may use a different scale – or numbers – to convey information. For example, all FICO score range between 300 and 850 with 300 being the lowest (or worst) possible score, while 850 is the highest (or best) possible score.

The range for VantageScore credit scores has traditionally been between 501 and 990, with the higher number representing the strongest score. But the newer version, VantageScore 3.0, has a range of 300 to 850.

The companies that develop credit scores – FICO and VantageScore, for example – do not decide which credit scores are “good” or “bad.” Nor do the credit reporting agencies that supply the credit reports that are used to create credit scores. Instead, it’s up to individual lenders and insurance companies who use these scores to decide which scores demonstrate an acceptable level of risk.

They use them in a variety of ways, to:

1. Determine the interest rate they will charge for a loan, or in the case of an insurance company, the discount they may offer on an insurance policy.

2. Decide whether to extend credit, how much credit to approve, whether to increase (or lower) a customer’s credit limit, or even to close a risky account.

In a way, then, there is no such thing as a “bad credit score,” since the number itself doesn’t mean anything until a lender decides how to use it.

In other words, a credit score is only bad when it keeps you from whatever you are trying to accomplish, whether that is to refinance a loan, borrow at a low interest rate, or get the best deal on your auto insurance.

But in the real world, there are some assumptions that can be made about credit scores that fall into different ranges. More at What Is a Bad Credit Score?

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How to Increase Credit Score

“Looking for ways on how to increase credit score? Let this article help. Read it now!”

How to Increase Credit Score

Most New Year’s resolutions require consumers to spend money, but here’s one that actually doesn’t cost anything and ultimately helps people save: Boost your credit score.

Low credit scores result in higher interest charges for all types of debt, including credit cards and home loans. Borrowers with a FICO credit score (the score used for most consumer lending decisions) of 700 save an average of $648 in interest on their credit card, $1,392 on their car loan and $2,340 on their mortgage each year, compared with borrowers who have scores below 620, according to a study by CardHub.com , a credit-card comparison website. Those savings get even larger for borrowers whose credit score is above 700. Separately, lower scores can lead to larger home and car insurance bills and make it harder to rent or buy a home.

Fortunately, there are ways to improve a low credit score and most involve scaling back on credit-card usage. That’s because in the world of credit scores, all debt is not treated equally. FICO scores tend to drop as consumers rack up more credit-card debt but don’t decline as much if someone signs up for a student loan, car loan or mortgage. Here are five steps to improving your credit score.

Pay down credit-card debt
To improve their credit scores, borrowers need to lessen their credit-card debt.

Once a borrower surpasses a 10% “credit utilization ratio” — that is, the amount of their credit card debt in relation to their total spending limit — their FICO score will likely drop, says John Ulzheimer, consumer credit expert with CreditSesame.com, a credit-management site, and a former manager at FICO. For instance, borrowers whose credit-card spending limits total $10,000 should not surpass $1,000 in debt — whether or not they pay off their balance in full each month.

That can be an onerous task for many borrowers. They’ll need to adhere to stricter limits if they want the highest score possible. According to FICO, borrowers with the best credit scores — of 785 or greater — use an average of 7% of their total credit-card limit. In contrast, student loans, car loans and mortgages are not considered by the credit-utilization ratio.

Consumers can consider asking their card issuers to increase their credit-card limits, which could in turn increase their credit score. Of course, that will require not swiping for more purchases on those cards.

Convert credit-card debt to personal loans
Borrowers with a lot of credit-card debt aren’t out of luck. They can actually improve their score before they even pay down their debt — with a bit of strategizing: They can consider rolling their credit-card debt into a personal loan.

Here’s why: Credit-card debt tends to be more damaging to credit scores than a personal loan, which is considered installment debt. The credit-utilization ratio (see previous section) does not take installment debt into account. This strategy would result in zero dollars of credit-card debt on the borrower’s credit report, which could boost their score by 100 points or more, says Ulzheimer. They’ll also pay lower rates to boot: The rates on personal loans currently average 11.36%, according to Bankrate.com. In contrast, rates on credit cards average just over 13% to 15.4%.

This strategy will only help borrowers if they stop using their credit cards or if they pay off the charges they make on their card quickly. Otherwise, their score won’t stay up for very long. Of course, consumers should pay off all their credit-card debt with their savings rather than signing up for a loan. But that assumes they have enough cash set aside after paying this debt for their emergency fund. (Financial advisers typically recommend people have savings equal to six to eight months of living expenses in a savings account.) More at 5 ways to boost your credit score

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