Credit Score?
by Author on Monday, August 16th, 2010 | 13 Comments
I don't understand what credit score is..can someone explain in very simple terms? and what a good and bad credit score is? How do you get a good score or a bad one??
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Credit Score is calculated based on your credit history to give lenders a simpler "lend/don’t lend" answer for people who are applying for credit or loans. The system awards points based on information in the credit report, and the resulting score is compared to that of other consumers with similar profiles. With this information, lenders can predict how likely someone is to repay a loan and make payments on time.
Although there are several scoring methods, the score most commonly used by lenders is known as a FICO because of its origins with Fair Isaac and Company. Fair Isaac is an independent company that came up with the scoring method and software used by banks and lenders, insurers and other businesses.
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When you have credit like loans, credit cards…etc those creditors report to the credit bureaus: Trans Union, Equifax and Experian. The credit bureaus hold information for other potential creditors to see how well you pay your debt to see if they want to give you credit like if you want another loan, cc…etc.
Now, if you skip payments or stop paying that is when your creditors report them as being bad and that brings down your score. I believe a perfect score is 900.
Moderate score considered something under 700 or 650. To get a good score, pay your bills on time and don’t skip payments. Don’t open credit if you know you might not be able to afford it.
If you find that your credit score is bad…you can always go to http://www.orchardbank.com and get a cc that gives you a very low credit and pay on time…usually that helps. Having a diversity of credit helps. For example, mine is decent. I have a mortgage, car loan, school loan, 3 cc, a couple of bills…etc.
If you just pay your debt on time you shouldn’t have any problems!
Good score – high number – paid bills on time.
Bad score – low number – pay bills late, repossessions, charge offs.
Bottom line, pay your bills on time and have nothing to worry about. Pay them late or don’t pay them at all, never get a loan gain.
a credit score is a number from 450-900. this score determines how good you are with paying your bills on time , thru credit cards mostly. good credit helps u out in the long run for loans, buying cars and a home. lower ur score worse it is and the higher the better. credit score depends on how u mangae paying bills ontime or not. it is that simple.
Its a rating that looks how use your finance credit (overdraft, loans, store cards, credit cards) and determines a rating, which potential leaders (companies that you wish to borrrow money from) to assess, as a means to give you credit.
If you have bad credit – they won’t lead you the money
if you have good credit – they will lead yo the money
It rates how good you are at borrowing money. It doesn’t rate whether or not you are winning with money. You need one for rent and utilites. But I wouldn’t borrow money to buy a car because they depreaciate so fast. I’d just by a used but nice car and pay cash for it. You can’t get around buying a house with out using borrowed money. And don’t borrow money if you don’t need to just to increace it the score.
..credit score begins when you have bills and you pay them on time, not late. the higher the "score"…the better off you will be when you need to borrow money (like for a house or car)….
…three major sources maintain your billing history from everything from the car loan to student loan, credit cards, utility bills, etc……so when the car company or mortgage company want to see how well you have maintained stability in paying off your debts, they contact these three most popular agencies and generate your past history when it comes to money. (i think one of them is equifax or something like that?)…..
..it is like a secret record of your history of you paying all the bills you ever had in your life…..
there is no simple way to explain it really. the credit score ranges from 501 – 990. If your score is 500 you are less likely to get a good interest rate on a car/or purchase a car w/o a co-signer, less likely to get a loan say for a house- your probability are very slim unless you have a very good deposit or again co-signer. but if your credit score is say 900 you will be able to get any car with a good interest rate, you will be able to get a house, you will be able to apply for loans and be approved. you show that you can manage your credit by keeping your score high. you can do this by making payments to credit cards on time, not defaulting on any student loans etc
keep track of your credit score so you know whether you are on track for any big purchases etc.
credit score is what lenders base your abilities to pay back a loan or offer credit to, other things like how much car insurance you will pay and how much interest rate your loan will be, a good credit score will give you more options for loans, credit applications and interest rates. Bad-opposite, will have higher loans, higher interest, higher payments or not qualify at all. You get a good score by not having alot of open accounts, paying on time and being an overall good guy. Bad score is exact opposite, always late on payments, no payments, too much debt. etc… higher 6 to 700 credit score is average.
A credit (FICO) score is a number that lenders use to estimate risk. Experience has shown them that borrowers with higher scores are less likely to default on a loan. Scores are generated by plugging the data from your credit report into software that analyzes it and cranks out a number.
While taking a decision on your loan approval, your lender will determine your credit score. The most common scoring method used is FICO scores. These ratings are usually used for determining your eligibility for mortgages. This
There is a wide variety of reports about you available to people you want to borrow money from or have financial interactions with, but the most largely adopted source is none other than Fair, Isaac & Co., (namesake of FICO) which developed the de facto credit scoring system used by some of the biggest lenders in the nation.
Companies like Equifax, Experian and TransUnion provide this information to financial institutions that deal with you and money to determine your creditworthiness.
Your creditworthiness determines what interest rate you’ll get for loans, or if you will be approved to rent an apartment. Maybe you’re starting to see how your FICO score can wreak havoc on your life!
Check your credit report FREE once a year
https://www.annualcreditreport.com
Check out how to improve your credit score here:
http://millionster.com/articles/debt/increase-fico-credit-score/