Have you ever wondered your
credit score
meaning? Generally, a credit score assesses how
responsible you are as
a borrower. Lenders can assume with your credit score the risk that is
involved with lending you money.
Just by looking at your credit score, a
lender will know how much they can lend you, how much need to be put
down, fees, interest rates, and terms of the loan. If you have a higher
credit score, you will have better interest rates and fewer fees.
Fair Isaac Corporation (FICO) provides
lenders with the best indications that you are credit worthy. Your FICO
credit score can range anywhere from 300 to 850.
If you have a score of
660, you are considered to have some type of imperfection in your
credit history and will most likely be give subprime interest rates.
The average borrower in the United States
has a score somewhere between 600 and 800. If you have at least a 720,
you will be considered in good standing with lenders.
If you are trying to determine your credit
score meaning, you should also think about how your credit score is
calculated. 35% of your score is based on on-time payments, 30% amount
of credit used, 15% credit history length, 10% types of credit used,
and the last 10% how much you apply for credit.
You can obtain a credit report from each of
the three major credit reporting bureaus for free one time a year. You
can examine your own credit report to verify correctness in your credit
history.
The bureaus have also established their own
credit score. They
range from 0-100%. The higher percentage the better. The average scores
are between 60 and 70%.
When your credit score is calculated, you
age, race, income, education, religion, etc. are not listed. Under the
Equal Credit Opportunity Act, it is prohibited to determine credit
worthiness based on any of the above personal facts.
Hopefully, some of this information has been
helpful in your quest for determining your credit score meaning.
Remember, that you should try to have at least a 720 credit score to
qualify for the best interest rates and offers.