Your credit history is a very important document that creditors, insurance companies, utility companies, cell phone companies, landlords, associations, and employers request and review in order to determine your credibility. Creditors look at your credit history and your Fair Isaac Corporation FICO score in order to determine the likelihood of your ability to make future payments. Your past payment history, score, and number of obligations (credit threads) are good determinants of your future ability to fulfill new agreements. It is considered the report card of your financial life. In the associations or employer's situation, they want to determine your integrity, accountability, and stability. When you complete an application for a loan, credit card, insurance, employment or association approval, they will be analyzing your credit history and more importantly, your score.
How is your credit score? 0-600 Poor, 601-659 Fair, 669-699 Good, 700-758 Great, 760+ Excellent, or 800 + elite in the 800 club?
Now that your aware of how important your financial situation is to your future ability to obtain a loan, insurance, utilities, cell phone, housing, and employment, it is essential to become educated on your credit score and where you are within the credit rating scale. The credit score rating scale ranges from 300 – 850. Fair Isaac's has reported that approximately 5% of the general population has a credit score below 550 and roughly only 10% of general population have a score rating above 800. It is important to be properly educated whether your current score is over 700 in good standing or under 660 and in need of repair. Below is a chart to display the categories and description.
Credit Score Rating Chart
760 – 849 Excellent score. Able to obtain the most favorable terms.
700 – 759 Great score. Able to obtain favorable terms.
660 – 699 Good score. Able to obtain good terms.
620 – 659 Fair score. Able to obtain approval at average rates.
580 – 619 Poor score. Able to obtain approval with high interest rates.
500 – 579 Undesirable score. Uncertain if approval will be granted. Do not worry as there are options available. The rate will usually be the highest possible rate a creditor can charge.
How does your Score match up to the scale?
The next question is usually, "How is my credit score determined and how do I get my score?
The simple answer is that creditors, such as banks, lenders, and credit card companies are always in communication with the credit reporting agencies. If you pay your creditors on time, they will report your accounts as current and in good standing. However, if you are late on payments or even miss a payment, they will report delinquent and negative comments. This is the strongest determinant of your score. Nevertheless, make an effort to pay your bills on time!
Your score is not fixed, it will go up and down depending on your actions. Your credit rating can vary 20, 40 or even more depending on your financing activities and creditor reporting. The fundamental principle is to continue paying your bills on time in order to improve your scores within the credit rating scale.
If you do not know what your credit is by now and have not been monitoring it for safety and security, you can order it through the three major credit bureaus in the United States. Your report can be obtained for free once a year every year or if you have been denied credit, employment, insurance, housing, public benefits, or employment based upon consumer credit report. There are online websites where you can order all 3 reports at once to easily compare, analyze, and spot errors that may possible be hurting your credit score. 3 in 1 report is a must so you know what all reporting agencies have been provided.
By knowing and monitoring your consumer credit report, you have accomplished the first step in improving your score. Always keep in mind that maintaining a good score means a lot in today's society. By having a good score, you will increase your chances of obtaining loans and be able to capitalize on future financial opportunities that may cross your path in life. Be proactive and educate yourself on how to improve your score through articles and online research.