Are you thinking about applying for credit? Whether you're buying a new car, getting another credit card, or refinancing your home, one of the first things your lender will do is check your credit score. This score will determine just how quick and easy it will be to get the loan. That's why it's always good to know what your current credit score is... before you approach a lender.
In case you don't already know what a credit score is, let me explain...
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.
Trans Union, Equifax, and Experian are the three major credit bureaus lenders use. Each credit bureau has their own way of calculating your credit score, but they all report their scores using the same scoring method: FICO. FICO is short for Fair Isaac Corporation. Don't be confused if one person uses the term "FICO score" and another uses "credit score" -- they both mean essentially the same thing.
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.
Credit Score Ranges - What Is Considered A "Good" Credit Score?
FICO scores range from 375 to 900 points. A higher score is typically considered a better risk. So the higher your credit score is, the easier it will be for you to get credit and the better the terms will be.
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.
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.
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.
In case you don't already know what a credit score is, let me explain...
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.
Trans Union, Equifax, and Experian are the three major credit bureaus lenders use. Each credit bureau has their own way of calculating your credit score, but they all report their scores using the same scoring method: FICO. FICO is short for Fair Isaac Corporation. Don't be confused if one person uses the term "FICO score" and another uses "credit score" -- they both mean essentially the same thing.
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.
Credit Score Ranges - What Is Considered A "Good" Credit Score?
FICO scores range from 375 to 900 points. A higher score is typically considered a better risk. So the higher your credit score is, the easier it will be for you to get credit and the better the terms will be.
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.
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.
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:
Is your credit less than perfect? Don't panic. There are things you can do to improve your credit rating starting today! Find out more at http://CreditHelp.ImprovingYourFinances.com/
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