Raise Credit Score – Exactly What Is A Credit Score?
Credit scores are everywhere you look today. Whether it’s in the news, on tv, or in magazines and newspapers, you’ll see something about this hot topic. It seems that everyone is talking about how important it is for you to have a good score …and how you need to raise your credit score if it happens to be low.
This raises the question …just what is a credit score and what does it mean?
One of the easiest ways to think of your score is as a rating system designed to give lenders a quick overview of your credit history. Through a series of calculations, all of the financial information contained in your credit report is condensed into a single number that lenders can look at and quickly decide where you fall on their credit scale.
Your actual score is a 3-digit number, usually between 300 and 850, that lets lenders know how you are paying off your current debts and how much of a credit risk you would be to them.
The higher your credit score is, the more the lenders will look at you as a good credit risk, making it more likely that you will be approved …and at better interest rates. For example, if you happen to have a score in the low 600s, you will often have trouble finding credit …while a score of 720 and above will generally give you the best interest rates.
However, credit scores are a lot like GPAs or SAT scores from your high school or college days – while they give others a quick snapshot of how you are doing, they can be interpreted by different people in different ways.
There are some lenders that tend to put more emphasis on your credit scores than others. A few lenders will work with you even if you have scores in the upper 500s, while others will offer their best rates and terms only to consumers with very high scores. In addition, some lenders will look at your entire credit report in making a credit decision …while others will accept or reject your loan application based solely on your credit score.
This is why you hear so much about the importance of having a good score – your financial future depends upon it. Just think about it …lenders are going to make a decision about you and your loan applications on the basis of a 3-digit number. They obviously know what your score means to them …and so should you.
To give you a better understanding of what your credit score …also known as your FICO score …actually is, we have put together some additional information for you. This was designed to give you a brief history and basic understanding of what a FICO score is, where it came from, and the role that it plays in your ability to get credit.
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