| Credit
Score Overview
About
your Credit Score
A credit score is simply a numerical representation
of your credit worthiness. The majority of lenders use some
sort of credit scoring model to help predict what kind of
credit risk you may be.
Your credit score
refers to your FICO credit score, developed by Fair, Isaac
& Co. to rate you as a credit risk.
The rating system
ranges from 300 to 850. Scores below 620 are ranked below
average; between 620 and 680 are average; higher than 680
is above average. Excellent scores are in the 700's. Higher
scores are better. With a high score, you have a good chance
of getting the credit and loan(s) you want.
These scores
can make a huge difference in what a loan rate is. Not so
much on mortgage rates, but definitely on other loans, including
car loans.
For mortgages,
your credit score
becomes the basis of what kind of loan you can get. And
to qualify for some "niche" programs, such as
100 percent financing, you must have a credit score in the
700s.
About
your Credit Score
Credit scores are based on the information in your credit
bureau record. The majority of Credit Scores are between
400 and 900. Higher scores are better. With a high score,
you have a good chance of getting the credit and loan(s)
you want. Keep in mind that when lenders consider a loan
or credit application, they generally ask for more information
because credit scores are not the only factor they use in
making decisions. Typically, this includes personal data
(such as income and monthly payments) used to determine
your ability to pay.
What
your Credit Score means
Both negative and positive factors influence your credit
score. The most important factors of each are listed below,
in order of importance. Remember that these factors vary
in how strongly they impact your credit score. For example,
if you have a very high credit score, the negative factors
in your analysis are likely to have a small impact. The
same is true for positive factors if you have a very low
credit score.
What
factors lower your credit score
- Payment History
- Bankruptcies
- Length of
Credit History
What
factors raise your credit score
- Credit Accounts
- Payment History
- Credit Usage
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