Credit Scores Explained
Credit Scores Explained
Whether it is for buying a car, a house, lowering interest rates or even identity protection, it is important to view your credit report regularly to know exactly where you stand on the credit score scale.
This way you can be on top of things and alert to any changes that may take place with your credit in this volatile market.
Many people have been impressed with first time home buyer incentives, others have been taking advantage of refinancing to lower interest rates which can save you thousands of dollars.
What is the Credit Score Range?
The common credit score range will be from 300-850 through the credit bureaus that report your 3 credit scores. They include Trans Union, Experian, and Equifax and will report your most recent credit score scale on a monthly basis.
Since frequent changes that go on with credit card companies include lowering credit limits and increasing rates, it can be a big problem if you’re not on top of the change in your FICO score not to mention the identity theft going on behind your back that can really create a problem if you are not aware of recent changes.
The Simplified Credit Range
Understanding the importance of credit scores begins by grasping essential elements underlying each specific break in the credit score range. Find out where you belong in the credit score range and how it impacts your personal financial security.
300 – 450 – This is the lowest credit range and the most unfavorable positioning on the entire credit score scale. If your credit report is reflecting a figure even lower than this limit it means that you have negative credit worthiness. A credit score falling between this range calls for immediate rectification actions in order to boost the positioning to an acceptable level.
450 – 500 – If your credit score belongs to this range still the red light danger signal is on. A score in this range reflects manifold credit imperfections which have to be corrected speedily. A score within this range would indicate to a lender that you do not have any credit history and discourage them from considering your credit applications positively. If there are errors in your credit report take immediate actions and wait until your score is improved before submitting your credit application to any lending institution.
500 – 560 – Though some have obtained credit within this range, a score in this level still reflects shaky credit stability. Loans and credits approved based on this score will demand very high interest rates and stringent pay back conditions.
560 – 600 – You are still not out of the danger zone, though you are in a much improved condition compared to those at the lower ranges. Pay close attention to the small imperfections in your credit report and take action to remedy the situation as you are almost close to being in the clear.
600 – 660 – This is the most common credit rating reflected in the majority of people receiving a credit report in the U.S. Unfortunately however, a score in this range still does not reflect perfect credit worthiness. Yet, bankers and lenders will not overlook your credit application. Though you may still have to face the risk of marginally high interest rates. At this score you need to work less to be eligible for superior credit facilities so take the necessary actions.
660 – 700 – You have now come out of the red zone. Lenders will be happy to grant your request for loans even though you are still one step away from a perfect credit position. Work on eliminating the minor issue that keeps you from getting in to the next level and enjoying perfectly reasonable interest rates.
700 – 750 – This is the most coveted position in the credit score scale. You will not encounter any difficulty in securing credit at perfect interest rates due to your esteemed credit worthy status.
750 – 850 – Not many people reach this area on the credit score range. However, if you can target a positioning in this range it means you can pick and choose from a wide range of options in any of your credit applications.