The Purpose Of Credit Score

Your credit score is a 3 digit number which is assigned as a convenient way for the lenders to be able to understand how credit worthy they will consider you to be.  It aids them in deciding whether you qualify for credit and what the associated interest rate will be.

When you apply for credit, your lender will request a copy of your credit report which includes lots of information about your credit rating as of the moment.  It will also involve the numeric credit score.  Given that lenders can easily get their hands on this information, it is advantageous to you if you review the details yourself every now and then.

There are three companies that yield credit scores:  Equifax, TransUnion, and Experian.  They generate a number between 300 and 850.  This number is often called the FICO score, and it 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 stumble upon another analysis of the numbers on our credit score rating scale page. Included in the factors that determine your score include your own credit history, the debts you owed, how much is left, the duration of credit history, and the type of credit you have used.

You can boost your score by paying down any debts, staying well under your credit limit, and pay all bills promptly.

Explore other resources that you may come across in this website to learn more about your credit score and how to boost it.

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