The Credit Score Scale Revealed

Most people have heard of this thing called a credit score, but not everybody knows what their score is. Even fewer know if their score is considered good or bad. There may seem to be some mystery shrouding credit scores, but once you learn a little bit about them, you will see they aren’t nearly as complicated as most people think. Here are some things you should know about your credit score and how it works.

All credit scores range from a low of 300 to a high of 850. Just by being alive, you get a score of 300. This means if you have absolutely no credit history, have never paid a bill, and don’t have an income you will be at 300. If you have done everything right your score may be a perfect 850. However, the credit agencies do not share how they determine credit scores, so there is no way to know the exact steps you need to achieve a perfect score. In reality, most people fall comfortably between these two extremes.

At this point a lot of people get concerned, they may know their credit score and think they are too far away from a perfect score. You should know that the average credit score is about 690. That won’t get you the best terms for a loan, but you should be able to get one if you need one. But what about a perfect score? Lenders understand how difficult this is to achieve, so they often start giving the best terms to those who have a score of 720 or better. Therefore, you don’t really need the near-impossible score of 850 to be in good shape.

A score that falls between 680 and 720 will typically give you decent terms on a loan or credit card. You may not get the best deal, but it should still be pretty good.

The next bracket down is for those whose credit scores are from 630 to 679. At this level you may find it difficult to find a loan with favorable terms. There’s even a chance that you won’t be able to get a loan at all. Every lender has slightly different standards as to who they lend money to and on what conditions that money is lent. It may take longer to find a loan, but take the time to shop around until you find the best possible deal, comparatively speaking.

Now, while the lowest score is 300, there isn’t as much difference between the 300 and 629 range. If you are able to get a loan at all, it will be at the highest rate. This can add even more of a financial burden. If your score falls somewhere within this bracket, then get copies of your credit reports to check for inaccuracies; making sure to dispute any and all errors. Even a few points to the positive can make all the difference.

Finally, be aware that every lender has different policies, so don’t give up. Keep trying to get a loan at a rate you can afford. This is especially true if you are on the border between two brackets.

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