A credit score is a number that can help creditors understand how likely a borrower is to repay a loan and make the payments on time. Credit scores range from 300 to 850 and are calculated using credit scoring models, which essentially analyze a consumer’s credit report from one of the three major credit reporting bureaus: Experian, TransUnion, or Equifax.
Your credit score can affect many aspects of your life, including getting a mortgage loan, car loan, student loan, and obtaining a credit card. Lenders, such as banks and businesses, use credit scores to help decide whether to approve for different loans and credit cards and what interest rate you’ll pay to borrow money. A higher credit score is better because it indicates that a person is a responsible borrower and is less likely to fall behind on payments. For example, the following credit score ranges indicate:
- 800 – 850: Excellent credit score. Borrowers is this range are considered to be low-risk borrowers.
- 740 – 799: Very good credit score. People in this range have shown good credit behavior.
- 670 – 739: Good credit score. Lenders generally view this range as acceptable borrowers.
- 580 to 669: Fair credit score. Lenders may consider people in this range to be higher-risk borrowers.
- 300 to 579: Poor credit score. People in this range often have difficulty being approved for new credit as they are considered high-risk borrowers.
Factors That Can Help Your Credit Score
There are many factors that can help your credit score, including:
- Making any and all bill payments on time, including loan payments, credit card payments and even cable and cell phone payments.
- Paying off debts as quickly as possible.
- Keeping your credit card balance below your limit.
- Applying for credit sparingly.
You can check your credit score by requesting a free copy of your credit reports from one of the three major credit reporting agencies (Experian, Equifax, or TransUnion).
If you want to learn more about how credit scores and credit reports work, the Law Office of Todd Cushner & Associates is here to help. Contact us at 914-600-5502.
