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Free credit score | What is a Good One?

Credit-Scores chartA Credit score is a three-digit number, usually ranging from 300 to 850 that mainly defines the credit worthiness of a person. It is a simple, numeric expression, which helps banks, & other moneylenders assess a person’s ability to repay the amount borrowed. A credit score is calculated based on information available in the credit report of that particular person.

Credit Score – Calculation Methodology:

A person’s credit score is generally calculated based on several aspects recorded in their credit history that define the financial life of a person. This credit history contains the number and type of credit accounts that a person possesses, the available credit limit, the span of the credit history and the payment history of the person. Each of these aspects is given a numerical value, and then the weightage is calculated based on how they affect the credit worthiness of that person. All these methodologies arrive at a credit score of a person and also make a clear suggestion to individuals with the question about what is a good credit score, or Free Credit Score.

Credit Score Chart:

There are various aspects that help in the measurement of credit scores available to lenders, and from that they calculate their own credit score range.

The Credit Score Range Using Various Scoring Models for preparing a credit score chart:

  • FICO Credit Score range: 300-850

  • Vantage Score 3.0 range: 300–850

  • Vantage Score scale (versions 1.0 and 2.0): 501–990

  • PLUS Score: 330-830

  • TransRisk Score: 100-900

  • Equifax Credit Score: 280–850

The higher the credit scores, the lower the risk. This means people with higher scores have better chances to get their loans approved and to get availed of the best interest rates when they get a loan approved. Every single lender has his or her own standards while calculating an individual’s creditworthiness. Generally speaking, anything above a 700 credit score is considered a good one.

If you would like to check your credit score, there are plenty of tools online that will help you calculate. While it is in your best interest to know what your credit score it, you should also know how to raise your credit score so that financial institutions don’t label you a high-risk candidate. These credit score charts are of utmost importance for a person to check credit scores and realize his place in the race of financial stability.

What is a good credit score? How to differentiate

Credit Score: 800-850 – Excellent:

The person with this excellent credit score is treated with utmost care at a lending establishment. They always have an upper hand in terms of loan approvals, lower interest rates and great discounts on insurance. This is often known as the perfect credit score by a vast majority of lenders.

The Excellent credit score’s benchmark is set up at various scores by different lenders. This ultimately depends on the type of lender and the purpose of the credit that is applied for.

loan-approved-red stampCredit Score: 750-799- Very Good:

This credit score has no much of difference to the excellent score in terms of loan approvals, however the interest rates of the loans may vary a bit. The main differentiating factor lies in the debt-to-income ratio. This minute difference in the credit score could be due to the fact that few payments might have been done past due date or some issues with employment status.

Credit Score: 700-749 – Good:

A Good Credit Score range is not going to hinder in loan approvals of a person, but there won’t be a red carpet rollout, that’s for sure! It obviously points out the fact that the person has well-managed financial history, but has fallen short in few credit measuring criteria.

Credit Score: 650-699 – Fair:

This credit score is usually considered to be the average or acceptable credit score. This indicates that a person who was managing his finances well has suddenly run into turmoil or a person is the stage of building up his finances. Lenders will generally do a lot of groundwork before deciding as to whether to approve their loans or not.

The factors that have affected the score will be examined closely. If it is realized that the person is a genuine customer trying hard to improve his financial position, chances are bright for a loan getting approved in his favor.

Credit Score: 600-649 – Poor or Bad:

This criterion of credit score clearly mentions the fact the opportunities available to the customer are very limited. The products offered rather become very less and much dependent on the lender. The rate of interest is comparatively higher for people with these scores.

It is more likely that a person will not be approved credit without collateral. This credit score is most commonly referred to as the “subprime” credit. The major reasons attributed to these low scores might be poor payment histories, bankruptcy filling, uncontrolled credit card outstanding and the like.

rolling-red-dice-credit-scoresCredit Score: 300-599 – Very Bad

This means the absolute lowest credit range and these persons are not at all entertained in most cases. Even collateral and co-signees do not make a difference when it comes to getting credit. There are a very specific set of lenders who cater to this category who offer a line of credit..

The only thing a person with such low credit scores can do is work out how to improve their credit score and get it up to the “good / very good” scale.

Experian Credit Score:

Experian is a leading global information services company that provides data and analytical tools to its customers throughout the world. This also helps people to check their credit scores and safeguard against possible identity thefts.

The Experian Credit Score is derived by

  • careful examination of the Credit Information Report of an individual,

  • that is designed based on the repayment history of existing or closed loans, credit cards, and

  • a complete background check of a persons financial status.

The higher the Experian Score, the better the chance of favorable consideration by banks and other lenders.

Fico Credit Score:

FICO (Fair Isaac Corporation) is also a reputed credit rating bureau and FICO Scores are calculated from many perspectives of credit data in an individual’s credit report.

This data is arrived after careful considerations of the five categories as outlined below:

Payment History – 35%

Amounts Owed – 30%

Length of Credit History – 15%

New Credit – 10%

Credit Mix – 10%

mortgage_sign blue skyThese percentages throw light on the importance that is attributed to each criterion while calculating a person’s credit scores. FICO Credit Scores considers both positive and negative information in its credit report. Late payments lower the FICO Scores, however re-establishing a good track record of making payments on time is sure to help raise the scores.

Equifax Credit Score:

Equifax Credit scores follow a unique rating model compared to the other rating agencies. A customer may request for a Equifax credit score online and it comes with a cost attached to its service.

How to check credit score?

Checking one’s credit score beforehand helps them become aware of the credit repaying abilities and improve it if needed. Understanding the credit score chart and regular checking of credit score also helps one to spot any errors or mistakes. The major credit bureaus in the United States are FICO, TransUnion, Equifax and Experian, and each of their websites will allow you to directly purchase.

There are various ways and means to acquire one’s credit score.

  1. Using FICO

A person might use FICO’s website and request for his fico credit score after providing basic necessities. They offer a utility called Score Watch that allows customers to keep a track of their credit scores. There is a 10-day free trial offer for customers after which they will to pay for the service.

  1. Contacting the Credit Bureau:

Credit scores can be obtained from the Credit Bureau directly after providing required personal information. The credit bureaus offer 3-in-1 reports, providing copies of the credit report and scores from all 3 credit bureaus. One has to fill out information, answer security questions, and provide his/her credit card information to obtain his copy of credit scores.

  1. Credit Monitoring Services

Credit monitoring services allow individuals to monitor all activity on their credit reports for a month.They charge a monthly fee and provide the credit score. Credit monitoring can be extremely helpful for those who have fallen prey to identity theft or those who wish to cautiously monitor their credit reports.

  1. Annual Free Credit Report

sign student-loans-warningAccording to Fair Credit Reporting Act, AnnualCreditReport.com provides free credit report once per year from each of the major credit bureaus: Experian, TransUnion and Equifax. To view the credit score once per year a person can apply for it online or the credit scores can be requested through phone or by post from the details available on the website.

Average credit score:

The Average credit score is determined by various factors by different bureaus.

Experian, a credit reporting company compiles averages credit scores for states from a sample of three million credit profiles, with scores range on a scale of 330 to 830.

Minnesota’s average score of 718 stands first in Experian’s most recent list. The U.S. average stands at 687, with southern states predictably reporting lower scores.

700 credit score:

Credit scores are usually placed into various categories subject to lenders. A credit score ranges from very bad all the way to excellent. It is not easy to place this 700 credit score in the credit score criteria.

Ultimately, credit ratings might fall in different categories depending on the lenders and the reason for the credit. A person with a 700 credit score can possibly do anything he wishes to do. It should also be kept in mind that in the 700 range a person will not likely get the best interest rates, so it is important to continue to construct a credit score for a future financial success as if you have/make Free Credit Score.

What Credit Score Is Needed To Buy A Car?

A car Loan can be acquired if a person has an average credit score, however, the rate of interest for the loan varies with the category of the credit score. The higher the rates, the lower the interest rates. A 700 credit score and above will be the most desired option to get an auto loan.

Getting a good deal on a loan for buying a car is not an unachievable task.With continued efforts and knowing the ways and means as to how to raise your credit scores one might easily get his auto loan approved.

It is always better to improveyour credit score before applying for an auto loan. However, if it is indeed necessary to buy a car, one should knowabout the loans that can be availed with his credit score. There are a lot of differences in auto loans, and knowing some of them can save money, regardless of the credit score.

The most important aspect that has to be put to examination before applying for a car loan is your credit score. Even more important is your understanding of how to fix credit score. Know the target and work towards what credit score is needed to buy a car

pay loan sign windowHow to raise your credit score?

Well, managing credit history and raising one’s credit score plays a vital role in leading a future perfect financial life style. Before one goes on to improve his credit score, he has to know what is a good credit score as well. There are various keys to a person’s quest as to how to fix credit score:

Manage all credit responsibly – A lot of common sense is required in handling how you spend and manage your money. Paying off bills on time and making sure that the debt doesn’t go to collections is of utmost importance. Paying the bills twice a month will definitely boost your credit score.

Keeping card balances low – A small section is based on what percentage of credit a person uses. Most personal finance experts mention that one should never use more than 30% of his/her credit limit on any credit card at any time.

Discuss errors.It is human to err, in case of any disputes; a person can always get it solved through Equifax, Experian and TransUnion

Avoid closingof cards. Canceling a credit card will cause available credit to drop. One way to keep a card active is to use it for a regular charge such as a utility bill.

Multiple lines of credit: Infrequent usage of credit cards and loans pulls down a credit score. A credit score takes into account the types of accounts a person possesses, the length of the credit history andre-payment histories attached to them.

It’s good to have a diverse mix of distinctive types of credits, installment loans and revolving lines of credit (credit cards).Mixing the credit types is often believed to raise the credit scoring capacity of a person.

Conclusion

There is a lot of information out there about credit, and credit scores. It is pertinent that you check credit scores regularly. It is in your best interest to keep abreast of what is going on with your money, what you need to do to improve your credit scores, how to fix credit scoreand maintain a consistently good credit score so that you are always given a helping hand when you are in need.

Download Annual Credit Report Request Form

 

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