There are millions of people that don’t know their credit score or what it does for them. They don’t realize the importance of their credit score or of how to maintain it. In today’s society, a person’s credit score is very important. It is looked at for many things, including employment, loans and even insurance. When a person doesn’t know about their credit score, history or how to maintain either of them, they are setting themselves up for a life of financial difficulties.
What is a Credit Score?
A credit score is a number that is based upon information gathered from the three major credit bureaus. These bureaus keep a credit report on everyone. These reports detail how people keep up with their financial responsibilities. These reports are consistently updated to reflect the most current information and obligations for everyone.
A credit score is normally a three digit number that creditors use to determine if they want to do business with someone. This number reflects a potential consumer in a positive or a negative way and will make for instant decisions in most cases. Those that have a good credit score will have more advantages than those with a poor score.
What are the Scores and Benefits?
When it comes to credit scores, there are many different combinations that a person can have. There are some that have excellent credit scores and others that have poor scores. Ideally, everyone should have excellent or good credit scores but that doesn’t happen with everyone.
720 and above: To have an excellent credit score, credit bureaus must report that person has been financially responsible in all ways. Anyone that has a credit score of 720 and above has an excellent credit rating. Those that enjoy an excellent credit score often get the best interest rates on any loans they apply for and they often don’t have a down payment when they have to be financed for things. There are great financial benefits for those that maintain a credit rating of 720 and above.
680-719: A good credit score is a score between 680-719. This is a score that will allow people to have good financing options. Although it’s not the best, the interest rates normally offered at this level are good. These individuals may have had some hiccups on their financial obligations but they have been resolved in an acceptable manner to prospective creditors.
620-679: The next level of credit scores are from 620-679. These are the most common scores given because a lot of people have unresolved credit issues reported against them. These terms will still allow a person to have good financing choices but they can get better when the score improves.
580-619: Poor credit rating starts at 580-619. These scores are listed as poor credit and many people have this issue. These scores are bad but they will still leave a person with some financing options but they will be higher than normal. These scores will lead to loans that will benefit the bank or financing institution, not the person that needs the loan.
500- 579: Bad credit is credit that anyone wants to avoid. A bad credit score ranges between 500-579. These scores are not ideal for anyone that will need financing at any point. The interest rates and terms of any loan will be extremely high and difficult to repay. Many times, lenders will not work with someone with a bad credit score without a co-signer or collateral. When people have bad credit, they should be very careful about their financial choices and obligations. It is at this point that people should begin to seek help for their credit score and look at what has been reported against them.
500 and below: Any credit score less than 500 is not good. It is worse than bad credit and time for action. Anyone with a credit score of 500 and below will find it extremely difficult to find financing of anything. If a loan is given, it will have astronomical interest rates and it normally will be a secured loan. Those that have a credit score this low should look into why and begin measures to increase their scores immediately.
Everyone should know what their credit report shows. A credit report should reflect accurate information about a person and when it does, the credit score should be accurate. Everyone needs to get a copy of their credit report annually and make repairs as necessary. This will make financial choices better and life a little easier.