What Does Your Credit Score Mean?
Your credit score is a 3 digit number that is assigned as a convenient way for lenders to understand how credit worthy you are. It is often used to help them decide whether you qualify for credit and what the associated interest rate will be.
Anytime you apply for credit, your lender is likely to request a copy of your credit report which includes lots of information about your current credit standing. It will also include the numeric credit score. Since lenders can easily get their hands on this information, it is beneficial to you if you review the details yourself from time to time.
There are three companies that generate credit scores: Equifax, TransUnion, and Experian. They generate a number between 300 and 850. This number is often called the FICO score, which stands for Fair Isaac Corporation.
Here is a quick breakdown of the FICO score values:
• 720-850 – this is the range of average scores and better, a very good range
• 700-719 – rates may not be as good as above, but your credit is still decent
• 675-699 – at this level you are starting to lose out on the best deals
• 620-674 – you cannot get great terms here as loans will cost you extra
• 560-619 – this is really subprime so you’ll have to work to improve
• 500-559 – it’s going to be tough to get any loan
You can find another analysis of the numbers on our credit score rating scale page.
Among the factors that determine your score include your own credit history, the amounts you owed, how much remains, the duration of credit history, and the type of credit you have used.
You can improve your score by paying down any debts, staying well under your credit limit, and pay all bills before due dates.
Explore other resources on this website to learn more about your credit score and how to improve it.
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Categories: Credit Score Articles Tags: Credit Score, credit score factors, Credit Union, FICO, FICO score, history, used
3 Credit Score Myths
The credit score a certain persona is indicative of his financial standing. Many agencies, on a regular basis, look at your credit score, from banks, credit unions, utility firms, landlords, insurers and even employers.
Myth 1
The Major Credit Bureaus Make Use Of Various Formulas In Coming Up With A Credit Score
This is considered to be the most common among all. Truth of the matter is, the major credit bureaus, from Experian, Equifax to TransUnion have a different term for the same score. TransUnion, say, calls it the Empirica, while Experian calls it the Experian/Honest Isaac Risk Model. They may have different names for the credit score, but they make use of the same formula in computing it. While the names used by the major credit companies are essentially the same, lenders often use just one credit report, to analyze your loan application.
Myth 2
Merely Paying Off All Your Debts Will Instantly Repair Your Credit Score
Your credit score will always be affected by your past credit history, and it’s not about your present debt. You can quickly pay off your credit card debts and settle any other outstanding obligations, but our previous history of late or missed payments will still reflect on your score.
Myth 3
Closing Old Accounts Helps Boost Your Credit Report
This is delusional. Closing old accounts will never have an impact on your credit score, but opening these old accounts will surely hurt your score. Having too many accounts also incurs damage to your credit score, because your score is typically affected by the difference between the available credit and the credit being used. Closing an old account will make your credit report look new, but the damage is done.
Categories: Credit Score Articles Tags: closing, Credit History, Credit Rating, Credit Score, credit score myths, history, look, used
What happens when credit is used for a debit card?
Question by CGYN3: What happens when credit is used for a debit card?
Meaning, if I’m at a store and I’m using my debit card, and the cashier says “Debit or Credit?”
And I say/push credit even though I’m using my debit card what will happen?
Best answer:
Answer by HumptyMomma
Other than the obvious…you will sign the receipt instead of entering your pin number…
Specifying ‘credit’ is always more secure. I’m not 100% on the reason why that is, but I know that it is most often the truth.
Also…many banks offer extra ‘rewards’ when you swipe it as credit versus debit. You are encouraged to do so.
…yet, it is habit for me to always say ‘debit’. Unless I’m usin my husbands card…which I always forget the pin number to…so I say ‘credit’ and sign.
Add your own answer in the comments!
Q&A: What is the standard credit score to purchase a used car?
Question by BrownSugar 2 Da Maxx: What is the standard credit score to purchase a used car?
I could not get a car since my credit is not good enough. Does anyone know what is the actual credit score to obtain in order to purchase a used car? Specific answers would help. Please no “IDK” answers.
Best answer:
Answer by MKE Bike Beginner
As I understand it, the car loan market is typically lumped into 3 categories:
– The sub-prime market. These are individuals who have credit scores less than 620. Bank financing is usually difficult (or impossible) – When it is provided, it’s usually contingent on substantial money down.
– The mid-prime market. These are individuals between 620 and 680 who can probably obtain financing (potentially without money down), but most likely will have to accept an interest rate well above 10%.
– The prime market. These are individuals with credit scores above 680 and will command a respectable rate between 5% and 9%, depending on the term of their loan and other factors. Loans with no money down are usually not a problem, given the fact that risk of defaulting is percieved to be low.
If you want easily get financing from a bank with little money down, you’ll probably have to bring your credit rating at least up to 650 or more.
Add your own answer in the comments!
Q&A: When a married couple buys a home, which person’s credit score is used to qualify for the loan?
Question by Judge Judy of Y/A: When a married couple buys a home, which person’s credit score is used to qualify for the loan?
Is it an average of both credit scores? And, is it strictly based on the “fico score” opposed to the information contained on the credit report? For exampe, my fico score is just average but my credit report is really really good, I think my fico score dropped because of numerous inquiries when I was shopping for a loan a year ago and also one late payment over 3 years ago.
Best answer:
Answer by Special K
They will look at both your credit reports if your buying the home together…But there is no black and white answer to this because there are all kinds of companies that do”creative financing” for home purchases, you need to ask them.
Know better? Leave your own answer in the comments!