Credit Score Meaning – What Does it all Mean?
Have you ever wondered your credit score meaning? Generally, a credit score assesses how responsible you are as a borrower. Lenders can assume with your credit score the risk that is involved with lending you money.
Just by looking at your credit score, a lender will know how much they can lend you, how much need to be put down, fees, interest rates, and terms of the loan. If you have a higher credit score, you will have better interest rates and fewer fees.
Fair Isaac Corporation (FICO) provides lenders with the best indications that you are credit worthy. Your FICO credit score can range anywhere from 300 to 850.
If you have a score of 660, you are considered to have some type of imperfection in your credit history and will most likely be give subprime interest rates.
The average borrower in the United States has a score somewhere between 600 and 800. If you have at least a 720, you will be considered in good standing with lenders.
If you are trying to determine your credit score meaning, you should also think about how your credit score is calculated. 35% of your score is based on on-time payments, 30% amount of credit used, 15% credit history length, 10% types of credit used, and the last 10% how much you apply for credit.
You can obtain a credit report from each of the three major credit reporting bureaus for free one time a year. You can examine your own credit report to verify correctness in your credit history.
The bureaus have also established their own credit score. They range from 0-100%. The higher percentage the better. The average scores are between 60 and 70%.
When your credit score is calculated, you age, race, income, education, religion, etc. are not listed. Under the Equal Credit Opportunity Act, it is prohibited to determine credit worthiness based on any of the above personal facts.
Hopefully, some of this information has been helpful in your quest for determining your credit score meaning. Remember, that you should try to have at least a 720 credit score to qualify for the best interest rates and offers.
