The Meaning and Significance of High and Low Credit Scores
What is a high credit score and what is a relatively low credit score? Although these terms are relative, there is a range which is pretty much accepted as the norm by most lenders.
Generally speaking, the risk you represent to the lender is more or less determined by your credit score as follows: A GENERAL CREDIT SCORING GUIDELINE: 721 or More = A 680 - 720 = B 660 - 679 = B- 620 - 659 = C 570 - 619 = D 550 - 569 = E 549 or Less = F You may say, by the way, who keeps my score and where does all this information reside? All this critical and "confidential" financial information about you, your spending, saving and shopping habits and your bill payment history is kept by 3 credit bureaus - Equifax, Experian (TRW) and Trans Union.
This financial data stored in these 3 credit bureaus is used by special analytical software developed by a company called Fair Isaac Corporation (FICO), which then assigns you a FICO score.
Your FICO Score estimates what level of risk you represent to creditors and the likelihood that you will default on your debts within the next 90 days.
Bottom line: You may ask, "Why is my credit score so important, anyway"? Here is the reason.
The interest rate you currently have is determined by your score.
How much you pay each month on a car loan, home loan and your credit cards, is determined by your interest rate, which is a reflection of your score.
Whether you will be selected for a job in a field where character and reliability is critical, may very well depend on your credit score.
To maintain a good score, always pay your bills on time and avoid being more than 30 days late.
If you are late once, catch up and pay on time for the following billing cycles.
Always avoid maxing out on your cards and maintain only 4 or 5 cards at most.
Now that you know why you need to take good care of your credit score, you first need to find out what your score actually is.
If you are not satisfied with your score or you feel there are errors you would like to dispute in your credit report, contact the three credit bureaus I mentioned above or a financial advisor for good recommendations.
If you haven't been doing so, you should also develop a new habit of checking your credit at least 3 to 4 times per year.
You have to do so to properly track your score and to protect your credit and to get alerts of potential attempts to steal your identity.
Every year, millions of people become victims of identity theft and end up losing the credit history that took them years to earn.
To protect yourself from identity theft, you should subscribe to a service that not only reports identity theft, but also proactively prevents your identity from being stolen in the first place.
Generally speaking, the risk you represent to the lender is more or less determined by your credit score as follows: A GENERAL CREDIT SCORING GUIDELINE: 721 or More = A 680 - 720 = B 660 - 679 = B- 620 - 659 = C 570 - 619 = D 550 - 569 = E 549 or Less = F You may say, by the way, who keeps my score and where does all this information reside? All this critical and "confidential" financial information about you, your spending, saving and shopping habits and your bill payment history is kept by 3 credit bureaus - Equifax, Experian (TRW) and Trans Union.
This financial data stored in these 3 credit bureaus is used by special analytical software developed by a company called Fair Isaac Corporation (FICO), which then assigns you a FICO score.
Your FICO Score estimates what level of risk you represent to creditors and the likelihood that you will default on your debts within the next 90 days.
Bottom line: You may ask, "Why is my credit score so important, anyway"? Here is the reason.
The interest rate you currently have is determined by your score.
How much you pay each month on a car loan, home loan and your credit cards, is determined by your interest rate, which is a reflection of your score.
Whether you will be selected for a job in a field where character and reliability is critical, may very well depend on your credit score.
To maintain a good score, always pay your bills on time and avoid being more than 30 days late.
If you are late once, catch up and pay on time for the following billing cycles.
Always avoid maxing out on your cards and maintain only 4 or 5 cards at most.
Now that you know why you need to take good care of your credit score, you first need to find out what your score actually is.
If you are not satisfied with your score or you feel there are errors you would like to dispute in your credit report, contact the three credit bureaus I mentioned above or a financial advisor for good recommendations.
If you haven't been doing so, you should also develop a new habit of checking your credit at least 3 to 4 times per year.
You have to do so to properly track your score and to protect your credit and to get alerts of potential attempts to steal your identity.
Every year, millions of people become victims of identity theft and end up losing the credit history that took them years to earn.
To protect yourself from identity theft, you should subscribe to a service that not only reports identity theft, but also proactively prevents your identity from being stolen in the first place.
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