If you're thinking about applying for credit, it's always a good idea to find out what your current credit score is ahead of time. It will be one of the first things your lender looks at when reviewing your application. And it could well be a determining factor in how quickly your loan is approved. Knowing what your credit score is before you apply will help eliminate any surprises along the way.
In case you don't already know what a credit score is, let me explain...
A credit score is simply a number calculated by the three major credit bureaus that indicates how well you handle credit. This is done by reviewing your past credit history and looking at how you are doing with any current debts as well.
Trans Union, Equifax, and Experian are the three major credit bureaus lenders use. Each credit bureau has their own way of calculating your credit score, but they all report their scores using the same scoring method: FICO. FICO is short for Fair Isaac Corporation. Don't be confused if one person uses the term "FICO score" and another uses "credit score" -- they both mean essentially the same thing.
Don't be surprised if your lender just gets a credit score from one credit bureau, instead of all three. This is not uncommon. Since all three bureaus follow the same scoring system, they will likely be giving very similar scores. For example, if Experian gives you a score of 710, Equifax and Trans Union scores should be in the same range. Of course, sometimes one credit bureau may have bad info. Mistakes happen, which is why you should review your credit report annually with all 3 credit bureaus. If there is a mistake, take the appropriate steps to fix it as soon as possible.
Credit Score Ranges - What Is Considered A "Good" Credit Score?
Your credit score can range from 375 to 900 points. The higher the number, the better you are. Getting credit will be easier, and you'll likely get better loan terms as well.
You should understand that each lender will have their own underwriting guidelines and cutoff points they have to follow. But here is a general guideline you can use to see where your credit score falls overall.
If you have a credit score of 650 and above, you probably have a very good credit history. Because you've been responsible in the past, you will probably find the approval process is quick, easy and painless. An added bonus is that your loan terms and interest rate will probably be very good.
If your score is between 620 and 650, you are considered to have generally good credit. That said, your lender may ask for additional documentation or explanations before approving large loans or extending a high credit limit. They are simply doing their due diligence, looking for any possible credit risks before final approval.
Chances are good that you will be able to get credit at a good rate and decent terms. It's just that instead of quick and easy, it can take a little longer to get approval.
Don't panic if your credit falls below 620. It doesn't mean you will never get credit. The right lender may still be willing to give you a loan, but you need to accept that your interest rate will likely by higher and terms won't be as good.
In case you don't already know what a credit score is, let me explain...
A credit score is simply a number calculated by the three major credit bureaus that indicates how well you handle credit. This is done by reviewing your past credit history and looking at how you are doing with any current debts as well.
Trans Union, Equifax, and Experian are the three major credit bureaus lenders use. Each credit bureau has their own way of calculating your credit score, but they all report their scores using the same scoring method: FICO. FICO is short for Fair Isaac Corporation. Don't be confused if one person uses the term "FICO score" and another uses "credit score" -- they both mean essentially the same thing.
Don't be surprised if your lender just gets a credit score from one credit bureau, instead of all three. This is not uncommon. Since all three bureaus follow the same scoring system, they will likely be giving very similar scores. For example, if Experian gives you a score of 710, Equifax and Trans Union scores should be in the same range. Of course, sometimes one credit bureau may have bad info. Mistakes happen, which is why you should review your credit report annually with all 3 credit bureaus. If there is a mistake, take the appropriate steps to fix it as soon as possible.
Credit Score Ranges - What Is Considered A "Good" Credit Score?
Your credit score can range from 375 to 900 points. The higher the number, the better you are. Getting credit will be easier, and you'll likely get better loan terms as well.
You should understand that each lender will have their own underwriting guidelines and cutoff points they have to follow. But here is a general guideline you can use to see where your credit score falls overall.
If you have a credit score of 650 and above, you probably have a very good credit history. Because you've been responsible in the past, you will probably find the approval process is quick, easy and painless. An added bonus is that your loan terms and interest rate will probably be very good.
If your score is between 620 and 650, you are considered to have generally good credit. That said, your lender may ask for additional documentation or explanations before approving large loans or extending a high credit limit. They are simply doing their due diligence, looking for any possible credit risks before final approval.
Chances are good that you will be able to get credit at a good rate and decent terms. It's just that instead of quick and easy, it can take a little longer to get approval.
Don't panic if your credit falls below 620. It doesn't mean you will never get credit. The right lender may still be willing to give you a loan, but you need to accept that your interest rate will likely by higher and terms won't be as good.
About the Author:
If you find your credit score isn't as high as you'd hoped, don't despair. Get more tips on how to improve your credit rating starting today! For more helpful information, visit http://CreditHelp.ImprovingYourFinances.com/
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