Wednesday, March 25, 2009
All You Need to Know about Credit Score
By Shu Zheng
Do you know what your credit score means? To be a wise consumer, it is important that you know your score and what it means to you, because it has a large influence on your finance.
The range of credit score is mainly divided as following:
• 800-850+: It is basically flawless. Some consumers may have 800 credit scores the minute their credit profile is established, but without supporting credit history, the score will mean very little to banks and lenders. The range represents approximately 13% of population.
• 720-799: Great credit. It will typically result in interest rates and approval rates that a credit score in the range of 800-850+ would yield. Roughly 27% of the population has this score range.
• 680-719: Good or OK credit. You may see some restrictions and fewer approvals when attempting to get a loan, lease, or a mortgage. It should be wise to evaluate your score and work to improve it.
• 580-619: Ok or bad credit. You will have a difficult time securing a loan, or applying for a credit card. Higher interest rates are applied for the lower scores. You need to work with bad credit banks and lenders to secure financing.
• 500-579: Flat or ugly credit. It is due to some derogatory marks on your credit reports such as collection, charge-off, mortgage late, foreclosure, or bankruptcy. It will impact your life for years.
• Below 500: Worst of the worst. Start educating yourself immediately to alleviate your problem.
If you see your score under 619, there are 5 steps you can take to beef your score:
• Pay your bill on time.
• Pay down your debts – and consider charging less.
• Don’t close old, paid-off accounts.
• Don’t be afraid of credit counseling.
• Stay out of bankruptcy if you can.