Good Credit Score - What Is It And Why Your Score Matters
Credit Score Exposed
Banks, lenders and financing agencies use only one instrument in deciding if your loan application should be granted or not. They employ the contents of your credit report or just briefly use your credit score. Where ever your credit score falls can be the deciding factor in denied or approved.
Your credit worthiness is defined by how well you’ve managed your finances. Anything about your financial transaction is contained in a credit report and is numerically represented by a credit score. The higher the score the less risk you pose for the lender or bank. It is therefore necessary to know where you stand based on the 2011 credit scoring range. The scoring range is divided into bad, good, or excellent. It is good that you have come across this material as you will learn more about credit scoring and what it tells about you.
Your credit score is calculated by using a statistical formula on data that has been collected from financial institutions that you have business with. It analyzes and weighs your behavior with these financial institutions based on your past credit history, unpaid balances, credit lines used and credit lines available.
An unpaid monthly credit card bill or a defaulted loan will drag your score down. Your only responsibility to your credit report is to faithfully and punctually pay your dues to keep all your accounts in good standing. A good behavior will consequently earn a good credit score.
Credit scores are generated by three credit bureaus namely, Experian, Equifax and TransUnion. They each have their own credit scoring models but altogether they integrally represented by a FICO score. Your FICO score can vary from 300 to 850 depending again on how you’ve managed your finances. You are allowed by law to see your credit report once a year or if you want to periodically check on the accuracy of your credit report, you may subscribed to any of the credit bureaus.
Let’s say you already have a copy of your credit report with a FICO score. Refer to the table below to see where you stand and how your score is interpreted.
Credit Score
Description
730 - 850
Excellent
700 - 729
Great
670 - 699
Good
585 - 669
Average
300 - 584
Bad
Just know that these are just a close approximation of how your bank interprets your score. Some banks or lenders may use their own instrument to calculate the risk you pose.
If your score is within 300-584, then for sure your loan will be declined, if not, expect that lenders will ask for a hefty collateral or impose a steep interest rate. If your score is within the range 585 and 670, there would be challenges to get your application approved or even get a favorable interest rate. A score above 670 gives you good chances that a good interest rate will go your way. Earn a score above 730 then any bank is yours to conquer. No banker or lender will turn down your loan.
It is therefore every citizen’s responsibility to take good care of their credit standing. A healthy financial management will create a good impression to bankers and lenders. There are just a few practical habits that will ensure your scores will grow. You must practice caution on the credits made available to you. You must pay your dues diligently and avert any inclination to buy on impulse.
I hope this article has been instrumental in your credit education. Don’t cease discovering more about your credit standing. There are far more resources and topics to explore. Being informed is being empowered. It is very important that you obtain a good credit score if you want to put your mind at ease.
Your credit worthiness is defined by how well you’ve managed your finances. Anything about your financial transaction is contained in a credit report and is numerically represented by a credit score. The higher the score the less risk you pose for the lender or bank. It is therefore necessary to know where you stand based on the 2011 credit scoring range. The scoring range is divided into bad, good, or excellent. It is good that you have come across this material as you will learn more about credit scoring and what it tells about you.
Your credit score is calculated by using a statistical formula on data that has been collected from financial institutions that you have business with. It analyzes and weighs your behavior with these financial institutions based on your past credit history, unpaid balances, credit lines used and credit lines available.
An unpaid monthly credit card bill or a defaulted loan will drag your score down. Your only responsibility to your credit report is to faithfully and punctually pay your dues to keep all your accounts in good standing. A good behavior will consequently earn a good credit score.
Credit scores are generated by three credit bureaus namely, Experian, Equifax and TransUnion. They each have their own credit scoring models but altogether they integrally represented by a FICO score. Your FICO score can vary from 300 to 850 depending again on how you’ve managed your finances. You are allowed by law to see your credit report once a year or if you want to periodically check on the accuracy of your credit report, you may subscribed to any of the credit bureaus.
Let’s say you already have a copy of your credit report with a FICO score. Refer to the table below to see where you stand and how your score is interpreted.
Credit Score
Description
730 - 850
Excellent
700 - 729
Great
670 - 699
Good
585 - 669
Average
300 - 584
Bad
Just know that these are just a close approximation of how your bank interprets your score. Some banks or lenders may use their own instrument to calculate the risk you pose.
If your score is within 300-584, then for sure your loan will be declined, if not, expect that lenders will ask for a hefty collateral or impose a steep interest rate. If your score is within the range 585 and 670, there would be challenges to get your application approved or even get a favorable interest rate. A score above 670 gives you good chances that a good interest rate will go your way. Earn a score above 730 then any bank is yours to conquer. No banker or lender will turn down your loan.
It is therefore every citizen’s responsibility to take good care of their credit standing. A healthy financial management will create a good impression to bankers and lenders. There are just a few practical habits that will ensure your scores will grow. You must practice caution on the credits made available to you. You must pay your dues diligently and avert any inclination to buy on impulse.
I hope this article has been instrumental in your credit education. Don’t cease discovering more about your credit standing. There are far more resources and topics to explore. Being informed is being empowered. It is very important that you obtain a good credit score if you want to put your mind at ease.
