Getting Up Close and Personal with Your Credit Score

Do you know what your credit score says about you? Undoubtedly you are quite familiar with the need for having a credit report devoid of bad notations, such as missed payments or repossessions, but how the scores are actually interpreted might not be as easily ascertainable as you thought. Credit scores range anywhere from 300 to 850. The higher the credit score, the lower the cost new credit will cost you. Conversely, the lower your credit score, the more money you will have to spend to obtain credit, usually in the form of higher interest rate. If your credit score is extremely low, lender may actually deny you credit altogether. If your credit is excellent, very good, or even just good, you are considered to be a decent credit risk by potential lenders. An excellent credit score usually is found at or above 800. This credit score entitles you to the lowest interest rates, most advantageous loan products, and is the direct result of a long credit history that shows timely repayments and also a healthy balance between income and debt ratios. A very good credit score of 750 – 800 makes you an attractive credit risk for lenders, and you will have a good choice when it comes to loan products for your situation. There is the danger that you might slip, if you overdo the loan to income ration, so be careful! Consumers with a credit rating of 700 – 750 are considered good credit clients. While your credit record may show the occasional late payment, the negative marks are not sufficient to disqualify you from attractive loan products. Nevertheless, you most likely won’t be offered the sweetheart deals that someone with excellent credit could enjoy. If your credit rating is between 650 and 700, you are considered to possess fair credit. This makes you a moderate credit risk, and in some cases might actually lead to denial of credit. Keep an eye on your outstanding credit card balance and pay off any cards before adding more credit to your profile. Credit scores between 600 and 650 are considered bad. The odds are good that you have a high debt to income ratio and you might also have a number of derogatory items on your credit profile. You are considered a candidate only for subprime lending, and as such it is highly unlikely that you can obtain credit products that are favorably priced. Instead, you routinely pay more than others for credit, such as auto loans or even credit cards. In many cases you will also be denied credit altogether. Very bad credit is found in the credit score range below 600. The odds are good that any kind of credit grantor will demand a cosigner before issuing you credit. If you have no credit score at all, you are a blank slate to creditors, and there are quite a few that won’t want to take a risk on you. On the other hand, when compared to bad credit, you are way ahead of the game.