If you are thinking of applying for a new car or home loan, it will be a good check where you stand on the Credit Score Free Credit Check
Why? Because knowing where you are on the your Report can have a huge effect on the interest rates for your new car or home you’ll get.
Generally speaking, the higher your score is the better , and the lower the risk is to the lenders like banks and private investors and the easier you’ll obtain a loan. While a low Creidt Score could result in much higher rates or having your application rejected all togather .
Understanding credit score & what it means
As people are becoming increasingly dependent on credit, some often neglect the total importance of Credit Score or often it can be costly. The magic score number says a lot about your credit who, what, when & how. It can either save you or your business tons money or cost you a bundle money.
In fact, getting loan these days is nearley impossible without a decent score 680 or better with most lenders . That is why it is important to understand the Credit Score , what is a good credit score and where you are on the the ladder of this system .
I have been personally someone who was rejected becasue of his credit score I was rejected for a loan application for the seriouslly dozens of times as no bank or corperation would take the risk to loan any amount to me. And even if I were to get the loan, the interest would be so high i have to find a secound job and the higher as the lenders want to tip the risk of lending the amount due to my poor credit score. See the true cost of a low credit score.
Well to Sum It up
Credit Score is a 3-digit rating that helps lenders understand the amount you can recieve that shows that your are dependable to the loan you borrow in whatever length of time. Before giving out the loan, your lenders request a credit report from one of the three credit agencies such as Experian.
This credit report reveals your personal information, financial history and of course how well you manage your debts and finance in the past (see also credit report). Basically it implies how wisely you have used credit in the past and how likely you’ll continue to do so in the future.
Your credit score is computed based on a subset of information within your credit report which a lending institution will use along with other factors when determining the risk factor when you apply for a credit card or request for a loan.
Although by law, you’re entitled to receive a Get your free copy of credit report annually, this free report will not reveal your actual credit score. In order to review your actual score to see where you are on the scale you will have to pay a fee to obtain your score.
It is true that issues largely impact your credit score
In general, how excellent your credit score depends on the following factors, though some carry more weight than the others
1. Your Totlal Payment History – 35%
2. Total Amounts Due or Owed – 30%
3. Total Length of Your Total Credit History – 15%
4. New Loans Applications Effect Your Credit Also– 10%
5. What Type of Credit are in Use Right Now – 10%
Finding credit score Decoder
Note that your credit score may be different from one institution to another as the scoring system used by all three credit bureaus are different. For instance:
- Equifax : Fair Isaac Scoring Model
- Experian : PLUS Score
- Trans Union : Classic FICO Risk Score
Till recently the three leading bureaus above have agreed on using a collaborated new scoring model called Vantage Score which uses a number range (501 to 990), which is different from FICO score (that uses a scale of between 300 to 850). Just like a student, you’ll be given A-F score. A is the best while F the worst.
Here’s the letter grade and its related score range
While a little competition is a good thing for the consumers, the most widely used scoring platform is still the classic FICO. Whether it will arise further confusion or otherwise, Vantage Score will likely coexist alongside the FICO Score for many years to come. See more comparison between Vantage vs FICO Score.
That said, if your credit score based on FICO scoring model is somewhere around 700, you simply have nothing to worry about because it is generally assumed that a decent credit score ranges from 660 to 700 – given the fact that the current median score in the U.S is 723.1
Otherwise, it always pays to improve your score and move up the rank within the scale before applying for a loan. Remember, any financial decision you make today may affect your credit tomorrow.
- National Average Credit Score [↩]