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What Is A Good Credit Report Score? |
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A credit report score is a figure calculated by a mathematical formula based on the data from your TransUnion, Equifax or Experian credit reports. It indicates how likely you are to repay your loans. Lenders have been basing their lending decisions for more than 20 years by using the credit report score.
What is 768, or 820 or 362? Are you confused? A few years back, a credit report score was information that not many people knew about. Only lending professionals were aware of this number and its significance. In March 2001, the curtain was lifted on this number and now you can see the number just by going online. This number basically defines your credit-worthiness. It was based on a formula developed by Fair, Isaac Co. (FICO) or a handful of other credit reporting agencies. This number can range from 300 to 850 and anything above 720 is considered average. What is considered a good credit report score? Your borrowing history of seven years is reflected in your credit report score. These scores are in the form of numbers varying from 300 to 900. Obviously the higher the credit report score, the better it is. Whether a score is a good credit risk or each lender and therefore the relation between the credit report score decides a poor credit risk and the final credit decision can best be made by the lender himself. It is the lender who determines the criteria for extending credit and out of all the information evaluated by the lender, the credit report score is only a part. A credit report score of 650 or above is a sign of very good credit rating and is considered a very good credit reports score. As such the probability of obtaining quality loans at the best interest rates is very high for people with credit report score of 650 or more. A credit report score of 620 to 650 points towards a good credit rating but may indicate certain trouble areas that the creditors would obviously want to investigate before taking a decision. They may also need additional documentation before a final decision. A credit report score of below 620 may still be able to get the consumer his desired loan. However, as the creditors consider credit report score below this threshold to be an indicator of greater credit risk, the process of loan approval is likely to be lengthier and more involved. You should remember that credit report score is not determined on the basis of race, gender or religion. Although each major credit bureau has its own method for calculating credit report score, the scoring criteria and models have been fairly well standardized. This means that a 600 credit report score at one bureau would roughly be the equivalent of the same credit report score at another bureau. Is credit report score a big deal? You may mot think so, but lenders base all their loan approval decisions on your credit report score. Using this score they can make a quick and objective assessment of consumer credit risk, also called credit trustworthiness or credit karma. A lot depends on this score for determining your fate in important matters such as getting a loan for a new home or a car and the interest rate that will be applicable to you. According to Fair Isaac, the FICO credit report score is used in 75% of residential mortgage applications. It is obvious that the higher the credit report score, the better the chance of your request being approved. You have the right to know as to how the credit scoring agencies assess you and how much is your credit reports score . It doesn't cost a lot and it only takes a few minutes to find out your score. Knowing your score will help you in making the correct decisions of your life. |
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