When you apply for credit, one of the first things a lender will check is your credit score. If you know what your credit score is before you apply, you'll have a better idea of what to expect in the loan process.
What exactly IS a credit score?
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.
The three major credit bureaus (Equifax, Experian, and Trans Union) all have their own way of determining your credit score. But they each use the same standard scoring system to show how credit worthy you are. It based on FICO, an acronym for Fair Isaac Corporation. That's why you'll often hear people use the term "FICO Score" when talking about credit scores.
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.
Where Do You Fall - What Is 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.
You should understand that each lender will have their own underwriting guidelines and cutoff points they have to follow. But here is a general guideline you can use to see where your credit score falls overall.
If you have a credit score of 650 and above, you probably have a very good credit history. Because you've been responsible in the past, you will probably find the approval process is quick, easy and painless. An added bonus is that your loan terms and interest rate will probably be very good.
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.
You may also find that your loan will take longer to finalize. Even so, chances are good that you are able to get approval at a good credit rate.
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. - 16036
What exactly IS a credit score?
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.
The three major credit bureaus (Equifax, Experian, and Trans Union) all have their own way of determining your credit score. But they each use the same standard scoring system to show how credit worthy you are. It based on FICO, an acronym for Fair Isaac Corporation. That's why you'll often hear people use the term "FICO Score" when talking about credit scores.
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.
Where Do You Fall - What Is 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.
You should understand that each lender will have their own underwriting guidelines and cutoff points they have to follow. But here is a general guideline you can use to see where your credit score falls overall.
If you have a credit score of 650 and above, you probably have a very good credit history. Because you've been responsible in the past, you will probably find the approval process is quick, easy and painless. An added bonus is that your loan terms and interest rate will probably be very good.
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.
You may also find that your loan will take longer to finalize. Even so, chances are good that you are able to get approval at a good credit rate.
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. - 16036
About the Author:
It's easy to see that your credit score plays a big part in 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
