In light of the recent changes in the economic climate, many people are keeping a close eye on their credit score. Lenders are becoming much more cautious about who they are approving for any type of loan and the credit scores are becoming more important than ever. However, it’s hard to know what’s a good credit score. Many experts don’t even agree, so how can you wade through it all and come out ahead?
The credit score range is between 300 and 900, depending on the ratings agency and who is doing the reporting. Of course, the low numbers are bad while the higher ratings are more desirable. These numbers are calculated by looking at the rate of default that appears in your personal financial history. The better your record, the better ผลบอลสด your score. Most Americans have a FICO score of over 750. Another large group falls between 650-750. Together, about 60% of current records fall within this range. To make this easy to understand, people with credit score ratings of at least 700 only have a 5% chance of defaulting on a loan and are considered a good risk. With a score of 650+, that chance jumps to 15%. While that used to be good enough for many lenders, the financial market is demanding better odds and your chances of obtaining a loan are going to be much better if your score is above 700.
Now that you know what’s a good credit score, you can get a better picture of what you need to do to qualify for your loan. Besides the score, you need to be financially stable. A good score won’t carry the day if you are out of a job or have a high debt load, for example. In fact, after the score, your debt to income ratio is the biggest thing a lender will look at. Pay down debt such as credit cards as quickly as possible and be prepared to show secure employment records. Also, request the free credit score info so you’ll know exactly where you sit.
If you have been as hard hit as many people in this economic crunch, you likely need help getting your credit score up. Banks are seeing thousands of previously sound accounts defaulting for the first time, so you are not alone. The first thing you need to know is to avoid bankruptcy, as it has the worst effect on your credit score. Instead, put every extra penny you have into liquidating your debt. Many companies are working with clients with special programs and payment plans to make that happen. As you pay of your accounts, don’t close them. Older accounts have more history and reflect better on your rating. It’s also possible to take a settlement. This will reflect on your credit score, but with time and effort, you can repair the damage that has been done. Use this as a learning experience and a jumping off point. After your accounts are cleared, put the cards away and use cash only. The open accounts will show little to no debt, creating a better rating and you will also be learning the discipline necessary for long term financial success.