How to Understand Your Credit Score

Your credit score is involved in many aspects of your life, from buying a house or car, to getting the best rate on your credit card, and even to getting a job. You can quickly and easily ruin your credit but fixing it is much more difficult and time consuming.

The basics:
The most widely used score is called a FICO score. There are 3 bureaus that calculate these scores, resulting in slightly different numbers depending on where you or a lender get the score from.
Excellent- 720 and above
Good- 660 to 719
Fair- 620 to 659
Poor- 619 to 600
If you’re credit score is below 600, creditors and lenders will generally NOT extend to you any kind of unsecured credit. People with “good” or “excellent” credit have a much better chance of qualifying for a car loan or a mortgage.

How is your score figured out?
– On time payments = 35%
– Amount of revolving debt in relation to the amount of your total revolving credit = 30%
– Length of credit history = 15%
– Type of credit (installment, revolving, consumer finance) = 10%
– Amount of credit recently obtained and recent applications for credit = 10%

To improve your credit score, try to lower balances on credit cards, pay bills on time, and don’t apply for credit too often. Don’t splurge and make credit decisions carefully. Don’t apply for a credit card just because a store offers you a discount!

This is a great site for estimating your score, seeing what credit cards you can get with your score, and tips for improving it: Credit Karma


People also view

Leave a Reply

Your email address will not be published. Required fields are marked *