Understanding what is a good credit score and why you need to have one is important. Learn the coolest information on how this score works and what it has to do with your credit report below.
Is this score 7 points like a touchdown and the following extra point? Or, is it 4-0? Four soccer goals for your team and zero goals for the opposing team? Well, nothing quite so easy!
Wikipedia defines "credit score" as "a numerical expression based on a statistical analysis of a person's credit files, to represent the creditworthiness of that person, which is the perceived likelihood that the person will pay debts in a timely manner."
While Wikipedia's definition is virtually correct, it doesn't really expound upon the mechanics or the meaning of a person's credit score. Let me explain.
A good score helps lenders determine that you are likely to make your payments on time and as agreed to. A bad credit score may induce lenders to offer you a higher interest rate for the home you would like to buy or the car you want to purchase because they view you as a high risk.
Worse yet, they may reject your credit application altogether! What's your credit score? 580? 630?
Your credit score is based upon information in your credit report. Lenders purchase your credit score from the three credit bureaus: TransUnion, Equifax and Experian. The higher your credit score, the better your chances of obtaining the loan you want AND obtaining favorable terms for that loan.
When lenders talk to you about what is a good credit score, they are typically referring to your FICO score. The FICO score was developed by the Fair Isaac Corporation and is the scoring system which is most common today. The FICO system assigns scores from 300-850. The most common scores are in the 600s and 700s; however, the higher the FICO score, the better!
Is 700 a good credit score? Lenders, for the most part, feel that FICO scores above and beyond 700 are a sign of financial health (sort of like being on the winning side of the scoreboard!) and are more willing to negotiate a lower interest rate and more favorable terms since they feel you are a good risk for their company (sort of like negotiating a new contract with the team owner!).
Scores lower than 600 are a red flag to lenders and will make their eyes bulge, their pulse quicken and cause their sweat glands to work overtime (sort of like considering signing one of football's bad boys to the team!)!
All in all, a good credit score is imperative to the healthfulness of your credit standing. It can mean the difference between low or high interest rates, acceptance or denial of a credit application and the ability to purchase the items you want in life.
You work hard for your money! Make sure your money doesn't work against you! Keep your FICO scores strong!
If your scores are low, you may need to bring them up by doing some credit repair. Do this before you apply for a loan.
First Time Home Buyer Programs defines the different programs out there so you can make a decision on the best one for you.
Have a Question is a great place to ask any question you might have. Go ahead...pick my brain!
Credit Repair gives tons of tips and articles to help you improve your credit score.
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Oct 08, 19 08:33 AM
Hello, I have a question regarding USDA vs. FHA home loans. I am in the process of getting a home in the next month but was told I wouldn't be approved
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Apr 15, 19 12:36 PM
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