Your credit score rating can have a dramatic impact on your financial well-being, from the interest rate you pay for a loan to whether you can get a loan at all.  And not all lenders view the exact same credit score in the exact same way.  What one lender may consider a good credit score, another lender may consider only fair.  It’s important to know and understand your credit score.  Sense cannot be made of lending practices without it, and without knowing the negative or positive effect it can have on your finances, there’s little incentive to improve it if it’s low.

Your credit score rating is a number somewhere in the credit score range of 500 to 849.  The higher the number, the better your credit score, and the better are your chances of borrowing money at competitive interest rates.  The credit score scale is broken down into five categories, from poor to excellent.  Although they may vary slightly among lenders, they look something like this:

Credit
Score

Meaning

760-849

Excellent.  With a credit score rating in this range,
you will likely be offered the best possible interest rate from the lender

700-759

Great.  You will not have any trouble getting a
loan, and you will get very competitive interest rates offered to you

660-699

Good.  There should be no issue getting a good
interest rate from a lender with credit rating scores in this range

620-659

Fair.  You will most likely still qualify for a
loan, but you will not get the best possible interest rates from the lender

580-619

Poor.  You may or may not qualify for a loan with
a score in this range, but if you do, it will be at an extremely high
interest rate

500-579

Very Poor.  You will likely not qualify for a
loan.  If a loan is granted, it will be
at the highest possible interest rates allowed

Source: Debt.org http://www.debt.org/credit/report/scoring-models

If your credit score rating is 619 or below, you should probably consider not applying for a loan at all until you can improve the credit score.  Take time and make the effort to improve your credit score ratings and then apply for a loan.  The money you save in interest charges alone will make it all worthwhile.

It may seem at first like a credit score rating of 600 would not have much impact on you financially versus a score of say, 680.  But it does.  Look at the chart below, and see how banks charge interest to customers based on their credit rating scores.  On the right-hand side of the chart is a monthly payment summary, and you can see that, based on the different credit score ratings, a consumer with a credit score rating of 600 will pay almost $650 more a month in interest than someone with a 680 credit score. That’s huge!

Credit score ratings have an enormous impact on your overall finances.  That’s why you, as a consumer, should do all you can to keep the credit ratings in the upper half of the credit score range. You should also do everything you can do to protect them, including using a credit score monitoring service like ScoreSense to keep track of any unusual activities that may be occurring in your name.

Source: myFICO.com http://www.myfico.com/LoanCenter/Mortgage and Credit.com

For more information on credit score tips or to get your free credit score today, visit our website!

 

Posted by:ScoreSense

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