There is a lot of discussion about credit reports and ratings, but exactly what is a bad credit score? Why do some people constantly get turned down for loans while others, who don't have any more money, are instantly approved with no trouble?
Credit ratings are an important part of everybody's life these days. Even if you don't want a loan, your credit score can affect your application for credit cards, apartment leases, and even some jobs. It can also affect anything that involves you committing to monthly payments - auto financing, some insurance schemes, even having a phone hooked up in your house.
FICO or Fair Isaac Corporation is the best known credit score calculator in the
Some lending companies will use the FICO score directly to estimate whether a person is likely to be able to pay any financial commitments that they are applying for. Other companies are members of a credit bureau who supply them with credit rating information on applicants.
The three credit bureaus in the
The range of FICO scores is from 300 to 850. The higher you score, the better.
Around 725 or higher would be a very good score. With a score like that you have a good chance of getting approved for the apartment, car loan or mortgage that you want to apply for, and you will be able to get low interest rates in most cases.
Between 580 and 725 you will still have no trouble getting the finance that you need but the interest rates are likely to increase as you reach the lower part of that scale.
Below 580 is a bad credit score, and below 500 is real bad. The lower you go here, the more trouble you will have finding credit, and the more interest you will have to pay. It doesn't seem fair that the worse off you are, the more they make you pay, right? But it's because you are seen as a bad risk. Your interest rates reflect the costs they think they might have getting the money back from you if you don't pay it.
If you have a bad credit score you need to know that before you start looking for loans. It is best to know your exact score and be upfront with it when you call any kind of loan company. That way if they are going to turn you down, you know right away without wasting any more time - and without having rejected applications appearing on your credit report, pushing your score even lower.
Knowing your own personal credit rating will help to get you the best credit deals available to you, now that you know what is a bad credit score and what is a good credit score.
17 comments:
Thanks for the detailed explanation! When I applied for my first credit card I didn't pay attention to all those details. As a result I couldn't establish my credit. Now I understand how I should act and hope to boost my credit score.
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Credit Score? there's a minimum of credit score for purchasing the car by personal loan is what it means by credit score? When applying the credit card there is a selection: for no credit check loans or have credit check loans? I don't understand the credit score.
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Thanks for the Detailed explanation
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Do you hate being one of those people with a bad credit score rating? Don't despair because assistance is on the way. Reading this article will give you an idea of how to repair your credit score rating so you can see positive results the next time you get the latest version of your rating from the credit bureaus.
Credit number repair starts by getting a new version of this document from a credit bureau. There are three agencies to select from - Expedia, Equifax and Transunion. Next you will need to review the document, also called a credit report. Many others have at least one or two problems with their report so don't be shocked if you have errors on yours. These should be corrected. If you have other documents to refute the errors, these documents should be mailed to the credit bureau who gave out the credit rating in the first place. They will research the issue and make the necessary omissions if your documents truly refute the errors.
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