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.
So what is a credit score -- and why is it important?
A credit score is simply a number calculated by the three major credit bureaus that indicates how well you handle credit. This is done by reviewing your past credit history and looking at how you are doing with any current debts as well.
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.
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.
Credit Score Ranges - What Is Considered 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.
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.
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.
If your score is between 620 and 650, you are considered to have generally good credit. That said, your lender may ask for additional documentation or explanations before approving large loans or extending a high credit limit. They are simply doing their due diligence, looking for any possible credit risks before final approval.
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. - 16928
So what is a credit score -- and why is it important?
A credit score is simply a number calculated by the three major credit bureaus that indicates how well you handle credit. This is done by reviewing your past credit history and looking at how you are doing with any current debts as well.
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.
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.
Credit Score Ranges - What Is Considered 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.
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.
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.
If your score is between 620 and 650, you are considered to have generally good credit. That said, your lender may ask for additional documentation or explanations before approving large loans or extending a high credit limit. They are simply doing their due diligence, looking for any possible credit risks before final approval.
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. - 16928
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
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