Credit Score Scale
Credit Score Scale
Credit Score Scale: Have You Compared Yours On All Major Credit Bureaus?
When you are looking at a credit score scale, you first need to understand that each three major credit bureaus have their own scores.
Just get each of your 3 credit scores, and check your level on the chart. That is it.
Again, you must get your credit score rating from each of the three credit bureaus before you can begin to see when you sit in relation to any scale.
Honestly there is no actual credit score scale. There are only the ranges of where credit score rating fits and what is considered good and what is considered bad. Again, you only need to worry about the actual score needed by the institution where you are trying to get a loan. For example, if applying for a home loan, and they say you need a score of over 640, then if the scores you see are all above or very close to 640 you are in good shape.
One thing that you should keep in mind about direct installment loan lenders is that they have different loan requirements than traditional lenders. While you may be familiar with your regular bank and credit unions, there are actually several title loan lenders that do not have traditional banking privileges. Instead, these lenders operate solely online. Make sure that you take the time to visit each lender's website so that you will know what you are getting before ever entering your information.
A Video On Understanding Your Credit Scores
Then to make matters worse, you will have a different score depending on who is using it. When you go for a home loan, they actually see a different score number than you will see. This is even if you have all your scores. However, do not let this worry you. If you have your 3 credit scores, you will know how your credit score rating.
Overall very good is anything over 720
Good is anything over 680
Acceptable is anything over 620
And bad begins at below 580
Know let me teach you a trick to raise your credit scores by as much as 50 points immediately. It is easy (if you have the money). Simply pay down all of your credit cards to below ten percent of their available credit. Therefore, if you have a 5000 limit, the balance needs to be "below" 500. Most people will not tell you this, and many believe that below 50 percent works, but I know for a fact that what I am telling you is true. I have tested it and the scores go up at every level above 10 percent.
If you are in the process of getting a home loan, your lender can actually do a rapid re-score to show this change. My advice is to do this with their knowledge so that they can track the payments you make and then submit this information to the re-score agencies. If you do this on your own, expect the change to show up in 30-45 days, which is still fast.
Now some information about the score and what it means:
The credit score scale is a tool that is utilized by financial giants, banks, creditors, and other money lending institutions so that they will be able to determine the financial health of a particular potential borrower. It is through this scale that creditors and other financial authorities are able to make judgments and inferences about that specific individual or groups of individuals.
Basically, the federal government of the United States have empowered three giant firms to assign the credit score scale. There is no official scale, but there are generally recognized ranges of where a credit score rating sits when viewed in the eyes of someone that will issue you credit. They do not really use any fixed mathematical and numeric formula in order to come up with the results. Instead, they use their rich experience with the different financial trends, especially the nature of the market as it sways along the ever-changing world market conditions. Through their experiences, they are able to come up with a set of criteria which is then formed as a rubric. From there, they start assigning scores, of course, after a very thorough analysis of the finances of that individual.
So, what do they commonly look at to come up with the scores? These financial authorities generally look at a lot of things. As you may already know, your bank account contains rich data about you as a person and as a worker. They study you background, along with your current financial adventures and misadventures, including your debts, loans, mortgages, rents, bills, etc. It is through these data that they are able to make wise assessments. And, indeed, these are wise assessors in their own minds. I personally can find many flaws in the current credit score rating system as it does not take into account a person's income in relation to the number of credit lines that they have. A person that has many loans that could perhaps be possible due to their business, will have their credit score reduced, regardless if they have sufficient income to pay these loans.
The same goes for an individual that must have their credit checked often. If a person is a real estate investor and buys a lot of homes, they will have many inquiries into their credit history. Their credit score is lowered due to having excessive inquiries in the eyes of those that determine the credit scores. In my opinion, this is not an accurate tool to assess the credit worthiness of everyone. It is effective for quickly eliminating some borrowers that have ridiculously low credit scores, but I have seen very wealthy individuals who have never paid a bill late, not be able to get their scores over 700. I do think it would be impossible to come up with a perfect scoring system that could be applied to everyone. At least if you do understand the factors that can raise or lower your credit scores, then you can alter how you look on the credit score scale by altering some of your accounts temporarily when it is time to get a loan.
There are many people that because of their line of business, will not be able to achieve the highest credit scores that are issued. These people should not worry because they are generally getting their loans from institutions that pay very little attention to the credit scores or the credit score scale when determining whether or not to issue a loan to a person of this caliber. It is the people that have only a few lines of credit and have a normal job, that need to pay very special attention to their credit scores. They are generally getting loans from institutions that will heavily way their opinions based on your actual credit score and they use the credit score scale as a determining factor in order to decide if they will continue processing your loan application, and sometimes they will stop looking if your score is not high enough.
The Credit Score Rating Levels
So, what are the different categories of scores are there in the credit score scale? There are five basic categories of scores as assigned by the federal government through the recommendation of the three companies mentioned in the first part of this article. They will be discussed in some brief detail on the following paragraphs.
The first category is assigned the alphabetical character E, also known as Poor. Generally, those with scores of 530 and below fall under this category. This is a clear implication that you are a poor borrower. In other words, you are the kind who has a lot of debts, and that you are unable to pay off your debts. Banks do not really care what your reasons are, you have to understand this fact.
After Poor is Uncertain, which is assigned the character D. This is pretty much like the worst level, only less ‘bad.’ But, generally, you will be given the same treatment, your interest rates will be a little lower than poor, but still pretty high. Also, there will be very little banks and lenders who will be willing to let you borrow capital.
The third level is the Fair level, or level C. This is the start of the stable financial health category. However, this is to be considered as a danger sign; a sign that you are not really handling your financial matters competently.
The fourth and fifth levels, level B and A, are considered as the Good and the Excellent levels, respectively. Of course, it goes without saying that these are the most ideal levels and that every borrower, every American must strive to have.
Anyone who spends too much time trying to understand the credit score scale is wasting their time. This comes from a person with over 20 years experience obtaining loans and repairing credit. All you need to do is maintain positive information on your credit reports and continually pay all of your bills on time, and you will not have to worry so much about any chart, nor should you be worrying about it now. Yes, you should pay attention to your credit scores and they should be an accurate reflection of the information contained in your credit reports. If you monitor your credit reports and make sure that the information is correct and you pay your bills on time, you will not have to worry about your scores. This is because your scores will be high as a result of all the good information contained in your credit reports.
Now a credit score can be very helpful to you in that if you do monitor your credit reports, and you see that there is a low score, this will help you identify that there is a problem contained within your credit reports. If you use the credit scores to monitor the information contained within your reports, then I think that is a proper use of your credit scores. This does not mean that if you have good credit score ratings you can ignore the information contained in your credit report. Many people make this mistake and assume that if their scores are good, then their credit reports do not need their attention. This is an incorrect assumption as you should always review the information contained in your credit reports.
Knowing the credit score rating scale is one thing, but you need to understand a lot more, you have to know your standings with all 3 major bureaus. This is easier now as the major bureaus, and some other companies, offer an inexpensive service that will monitors both your credit reports and your credit scores on all 3 bureaus. This is money well spent if you are trying to repair your credit or have issues you are worried about. Are you planning to buy a home or a car soon? Do you need to maintain a good credit history for your employment? There are many reasons why it is worth the time and some money spent to monitor and maintain a proper credit score rating.
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Credit Score Scale