Before you pull out a loan from an
institution, you have probably heard that the creditor will examine
your
credit score range. The reason they do this is
to check your past
credit history.
By past credit history, I mean to verify you
pay your
bills on time, how much income you make, if you own a home, and how
long you have worked at your current job. A lot these factors are taken
into consideration because a creditor wants to protect themselves from
you defaulting on your loan.
Most credit rating systems depend on the
creditor and their experiences with customer. To produce the system
that is right for their organization, a creditor will judge your
eligibility by the factors listed above.
If a credit score range is used, however,
you can expect the follow definitions for the following scores 300-850.
* 700-850: Excellent or very good credit
* 680-699: Good credit
* 620-679: Average credit
* 580-619: Low credit
* 500-580: Poor credit
* 300-499: Bad credit
Good credit score ranges are used as a
determining factor for being able to qualify for services from
creditors. If you are in the good or excellent categories, you can also
expect to get a lower interest rate.
When trying to buy a house, it is
essential to have good credit so that you can get the best rate
possible. On the other hand, if your credit score range is lower than
the excellent or good categories, you can expect to pay an interest
rate a few points higher than the prime. If you take out a 30-year
loan, that will be a lot of money in the long run just because you have
poorer credit score.
It is a good idea to be aware of you
current, standing credit score. It should be part of your annual
routine to check your FICO credit score and credit report.
If you are
aware where you are situated in the credit score range, you will have a
better handle on your credit and find ways to build your score if
needed. Checking your credit score and report is also a good idea so
you can check for any discrepancies that may be pulling your score
down.