The calculations that are used to arrive at your credit score are actually based on a lot of different statistical data, and they are based on objective evaluations. You receive points based on a number of different unique credit factors. Then, creditors are going to take all of this information that is on your credit score, comparing it to these statistics for people that have similar credit profiles, and then points are granted to you based on a number of different factors that predict what is known as creditworthiness.
Some of these factors include your outstanding debt, your payment history, your late payments and how long you have had credit accounts. The total amount of points that you have is going to reflect how reliable or unreliable you are, judging your past behavior and what it suggests regarding how likely you are going to be to pay bills on time or repay a loan.
So what is the best possible credit score?
If you possess a credit score that is 760 points or higher, then you should consider that to be an “A” credit rating. You are going to be able to get some of the best credit rates. If you have above a 700 credit score, then you have what is essentially a “B” rating. If your credit score is between 600 and 700, then you essentially have a “C” rating. Below a 600 credit score is a “D” or “F” credit score. The lower that your credit score is, the higher your interest rates are likely to be.
Is my score really being fair?
It is stipulated by the Equal Credit Opportunity Act that certain characteristics not be used in the determination of your credit score including religion, race, ethnicity and gender. But, yes there are some things that seriously hurt your credit score.
What differences exist between credit scores and credit reports?
The credit report is like the transcript that explains why your score is what it is, and your credit score is simply a numerical representation of your transcript, sort of like a Grade Point Average or GPA. Both of these things are considered when it comes to granting you a loan or a credit card, the credit score is simply a snapshot of all of the information that is contained within your credit report.
These doors, your credit score is likely to be evaluated for nearly everything from getting a job to applying for a loan, renting an apartment or buying a home. Your credit score and report are quickly becoming an important assessment factor when it comes to many of your lifestyle and financial decisions, meaning that it is important for you to understand what your credit means to you.
Understanding what your credit score and report are all about is the key to getting the most out of these assessment tools.