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What is a Good Credit Score

“You might have asked yourself, over and over, what is a good credit score? Let us help you answer that question. Read more now!”

Determining What is a Good Credit Score

When it comes to your credit, it’s important to know how you stack up. Do you have good credit? Excellent credit? Poor credit? How can you find out? In most cases, the easiest way to determine the health of your credit is to look at your credit score, a numerical value that reflects a mathematical analysis of your debt, your payment history, the existence of liens or other judgments, and other statistical data collected by the credit bureaus. In other words, your credit score is the compact, simplified version of your entire credit history, all rolled up into one tidy three-digit number.

Why Do You Need Good Credit?
The importance of having good credit can’t be understated. From helping you get a loan, to qualifying you for a great job, good credit simply makes life easier and less expensive.

In the eyes of lenders, employers, insurance agents, and a host of other people and entities, your credit score represents how responsible and even how ethical you are. For example, lenders look at your credit score to determine not only your ability, but your willingness to repay a loan. Insurance companies view an individual with a good credit score as someone who is trustworthy and less likely to commit insurance fraud. Employers look at credit scores as a way to determine whether a candidate will be a dependable new employee.

A bad score, however, can prevent you from being able to purchase a home, work in certain industries, and will wind up costing you a bundle in higher interest rates and fees. However, if you understand what hurts your credit score, you can make an effort to fix bad habits and improve your credit rating.

The Three Major Credit Agencies
Experian, Equifax, and TransUnion
There are three major credit agencies that provide consumer credit information (including credit scores) to the majority of interested parties: Equifax, Experian, and Transunion. Each reporting agency collects information about your credit history from a variety of sources, including lenders, landlords, and employers, as well as other sources. These includes public records, current and past loans, your payment history, and other data. They then rate your performance using a proprietary scoring system to come up with a credit score.

Because each agency may access different information and has its own formula for calculating your creditworthiness, it is not uncommon for someone to have three different credit scores.

Understanding Credit Scores
Your credit score is a three-digit number that, without context, may mean very little to you. Here is a breakdown of how lenders, insurance agencies, and employers all view your credit score:

Excellent Credit: Credit Score Above 800
If your credit score is above 800, you have an exceptionally long credit history that is unmarred by things such as late payments, collections accounts, liens, judgments, or bankruptcies. Not only do you have multiple established lines of credit, but you have or have had experience with several different types of credit, including installment loans and revolving lines of credit. You generally have a stable work history, usually with one company. More at What Is a Good Credit Score – Understanding Credit Ratings & Ranges

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A Guide to Credit Score Scale

“Where you fall on the credit score scale is important. Let this guide help you. Check it out now!”

All About Credit Score Scale

Our financial lives are dictated with terms such as credit score, credit ratings, credit history and so on. These are the terms which often crop up when you are applying for loans or credit cards. No money lender or a finance institution approves a loan without reviewing the applicant’s credit scores and credit history. Although, most people have a vague idea regarding what are credit scores, most of them are unaware about the credit score scale.

Credit Score Scale Guide
Credit score is a statistical technique of determining the probability of an individual repaying his debt within a specific period of time, by evaluating and analyzing his previous credit history. In short, it is your creditworthiness represented by a number. The evaluation and analyzing work is done by three credit bureaus namely, TransUnion, Experian and Equifax. These bureaus have their own parameters and mathematical formulas for deriving a person’s credit score. The software program that uses the mathematical formulas to find credit score is devised by Fair Isaac Corporation (FICO), hence the score is also called FICO score. The scores derived by each of these bureaus may vary slightly, owing to the differences in the information in their databases.

Typically, following parameters are taken into consideration while deriving a person’s credit score. A fixed weightage is assigned to each of these parameters, which is as follows:
Payment history (35%)
Outstanding current debts (30%)
Length of credit history (15%)
Types of credit accounts owned (10%)
New credit applications (10%)
Credit Score Scale Chart

The FICO scores are expressed in a numerical range of 300 to 850.

Excellent
The credit scores between 760 to 849 are considered as least risky with a very high creditworthiness. The credit score of 850, which is an ideal credit score is the highest score possible in this range. People with excellent credit scores are entitled to fastest approvals and enjoy lowest possible interest rates.

Great
The next best category is ‘great’ with credit scores in the range of 700 to 759. People in this credit score range also enjoy almost all the privileges as those with excellent ratings.

Good
Good credit score range is a category in which most Americans falls. Credit score range of 660 to 699 is not a problem while seeking loan approvals. However, you may not get the best possible interest rates, enjoyed by the above two classes.

Fair
Credit score range of 620 to 659 is considered as low to medium risk. Although getting loans may not be an issue, getting them at affordable interest rates certainly is. People with fair or average credit scores should look for ways to improve credit scores so that they too can enjoy good interest rates.

Poor
You may have to run from pillar to post to obtain a loan, as money lenders regard poor or bad credit scores as high risk. Even if you manage to obtain a loan, you will have a tough time keeping up with the payments, owing to very high interest rates.

Very Poor
People who have very poor credit scores below 580 should consider credit repair before they approach a loan institution. Consistent efforts towards credit improvement may eventually help you attain a better credit score range. More at Credit Score Scale Guide

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Credit Score: All You Need to Know

“Confused what Credit Score is? We’ll help you answer that question and more. Check this out now!”

All About Credit Score

Your credit score determines your eligibility for credit cards, home loans, car loans, student loans, apartment rentals and even certain job positions. It can mean the difference between a reasonable or exorbitant interest rate, and the difference between an affordable or excruciating insurance rate. There are few, if any, 3-digit numbers that hold so much power.

Where can I find my credit score?
Once a year, federal law entitles you to a free credit report from each of the 3 major credit bureaus. If denied credit, you’re eligible for an additional report. To view your free credit report, simply go to AnnualCreditReport.com.

Unfortunately, getting a free credit score is a little more difficult and a bit more costly. You can obtain your credit score from a number of websites, but they all demand a membership fee. However, the fee generally comes with a grace period in which you can avoid paying if you cancel your account.

What is a credit score? And how is it different from a credit report?
Your credit score—also known as a FICO score—is a 3-digit number that summarizes your creditworthiness. Ranging from 300 (worst) to 850 (best), your credit score tells lenders how likely you are to pay back loans. Your primary score is determined by Fair Isaac Corporation (hence “FICO”) and is considered the most accurate assessment. The 3 major credit bureaus (Equifax, Experian and TransUnion) also issue credit scores that vary slightly from bureau to bureau.

A credit report is an in-depth analysis of your creditworthiness issued by the credit bureaus, a detailed examination of the components that comprise your credit score. You’re entitled to a free report from each of the 3 bureaus once a year—twice if you’re rejected for credit. You should check your credit report regularly and report discrepancies immediately. Mistakes in credit reports happen more often than you might think and can have adverse effects on your credit score. You can view your free credit report (like really, truly, totally, 100% free) at AnnualCreditReport.com.

How is my credit score calculated?
Your credit score is contingent on a number of factors that can be summarized in 5 categories:

  • Payment History (35% of your FICO score): Making payments boosts your score. Missing payments destroys it. Recent history has a greater impact.
  • Amounts Owed (30% of your FICO score): Debt can hurt your score, though installment loans (like student loans) are actually beneficial if you keep up with payments. Your debt-to-credit-limit ratio is also important. Letting debt come too near your spending limit reflects poorly on your creditworthiness.
  • Length of Credit History (15% of your FICO score): The age of your accounts is taken into consideration. Old accounts earn more trust, while new accounts are regarded with suspicion.
  • New Credit (10% of your FICO score): This category looks at recent credit acquisitions and inquiries into your credit score. Too many new credit lines or too many inquiries in a short period of time look bad.
  • Types of credit used (10% of your FICO score): Different kinds of credit impact your score in different ways. The best way to score points here is to diversify your credit types.

How do I raise my credit score?
Establishing credit is easier than you might think. A good credit score starts with smart spending. More at What’s My Credit Score?

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