Credit Score Scale

Archive for March, 2010

When you decide it is time to buy a house, finance a car or apply for a credit card is not the time to find out that your credit is poor according to the credit score scale. If your credit score is low you may find that you are either not going to be approved for the credit you need or if you are approved you may find that the terms and the interest rate you are offered are not affordable. Unfortunately far too many people do not understand their credit scores and how important they are to them.

When you are looking at your credit rating you need to understand how the credit score scale works before you apply for a loan of any kind. In some cases a poor credit score can even prevent you from getting a job as many employers look at creditworthiness as part of the hiring information. This  score scale runs from a low of 350 to a maximum of 850. Typically those with excellent credit have a score that is over 700.

For those with a rating of over 700 on the  score scale not only have no problem getting a loan of any kind, they get the best possible rates on the loans. Those who score between 450 and 650-700 can get the credit they need but are likely to have to settle for higher rates of interest and less favorable terms. Anyone who has a score of less than 450 is unlikely to be approved for credit except by specialist lenders who charge outrageous rates of interest or they may have to find a co-singer who has excellent credit to guarantee the loan.

With this in mind you are probably wondering how the figures on your  score scale rating are arrived at. There are several pieces of information that are taken into account before your credit rating score is calculated and published by the three main credit reporting agencies. First and most importantly every aspect of your bill payment history is considered. This includes credit cards, loans, monthly bills and any other form of installment payment you have ever made.

Then they look at how long you have had credit, those who have never had a loan or have not been borrowing for very long are scored lower than those who have a long history of borrowing and paying back. The number of times you have applied for credit, whether you have been approved or denied also have an effect on your credit score scale. The more you understand how you credit score is determined the easier it will be for you to fix it if it low or keep it over 700 where you can get the credit you need.