Your credit score is a number ranging from 300-850.  This number indicates the risk a lender takes when you borrow money. It is calculated based on many variables some include your:
  • Payment history for loans and credit cards, the number of accounts open and the severity of late payments.
  • Public records such as a bankruptcy or repossession.
  • Credit utilization rate and the number of inquiries on your report.
  • The type, number and age of credit accounts. Including the total debt amount.
The FICO score is the most common measure used by credit agencies. The other measure that can be used is the VantageScore, which is a partnership between three credit reporting agencies, Equifax, Transunion and Experian. In both cases, the higher the credit score, the lower the risk to the lender.
Use the following pie charts to determine what your current credit score means to lending institutions.
Exceptional Credit Score: 800-850
  • Consumers with a credit score in this range are considered consistently responsible when it comes to managing their borrowing, considered prime candidates to qualify for the lowest interest rates. To have such a high score you must have a long history of no late payments, as well as low balances on all credit cards. Applicants may receive lower interest rates on mortgages, loans and credit lines because they are deemed to be very low risk for defaulting on their credit agreements.
Very Good Credit Score: 740-799
  • A credit score in this range indicates that a consumer is generally financially responsible when it comes to their finances and credit management. Almost all payments, including loans, credit cards, utilities and rental payments are made on time. Credit card balances are relatively low compared to their credit account limits. Applicants likely to be approved for credit at competitive rates.
Good Credit Score: 670-739
  • This range places the consumer  near or slightly above the average of U.S. consumers, as the national average score is 695. While you may still get competitive interest rates, they are unlikely compared to the ideal rates of those applicants in the higher categories, and it may be harder to qualify for some types of credit.
Fair Credit Score: 580 to 669
  • Consumers with credit scores in this range are thought to be in the "fair" or "average" category. They may have some negative information on their credit history, but there are no major delinquencies. Applicants may be approved for some credit, though rates may be unfavorable and with conditions such as larger down payment amounts.
Poor, Very Poor Credit Score: Under 580
  • A consumer in this range has a significantly damaged credit history. This is the result of multiple defaults on different credit products from several different lenders. However, a poor score may also be the result of a bankruptcy, which will remain on a credit record for up to 10 years. Borrowers with credit scores that fall in this range have very little chance of getting new credit. If your score falls in this range, talk to a financial professional about steps to take to repair your credit.
If you just reviewed your credit information and discovered that your credit scores aren't quite where you thought they'd be, you're not alone. At Prominent Financial Consultants we provide the best quality service that can help you restore your credit completely. Book a free consultation with one of our experts today to discuss your options. PFC will help you take control of your financial future.