A good credit rating can save you thousands of dollars per year in interest payments and finance charges. When you apply for a mortgage, a lender will examine your credit report to determine your level of “goodness” to qualify. The lower your score, the less likely you are to qualify for the loan. Lenders make their money based on the amount of risk they assume borrowers will pose to them. A low score means the lender has more of a chance of making a loss and so the interest rates he or she charges will be higher.
But, what is a good credit score range? That depends upon how the numbers are compiled. Different credit scoring systems use different methods to determine your creditworthiness. Throw in different creditors using various credit scoring systems, and you’re probably going to end up with varying scores based upon which system was utilized.
Some people try to get the best possible number by taking the lowest number they can get and comparing it to the others. But, this isn’t the best way to gauge your situation. The Fair Isaac range, for example, is much lower than the other three. While it’s possible to find three numbers that come within close range of your own, you would probably be much better off selecting the middle numbers. These numbers will give you a reasonably accurate idea of where you stand.
What is a good credit and poor credit score range for you may not be the same for someone else. If you have had some late payments, you’ll have a higher number than someone who has never had late payments. Someone who has bankruptcy issues and bad debt is going to have a much lower score than someone with no credit issues. This is why it’s important to know your exact score so you can compare yourself to others in your position.
There are other things that can affect your credit scores besides the ones mentioned here. Credit bureaus periodically review your credit reports for benefits. The advantages are information about your payment history, any foreclosures, bankruptcies and collections, any court judgments, and more. Your credit history and vantagescore can affect your eligibility for loans and mortgages, too. Because of this, it’s a good idea to check your credit reports often and get any benefits erased if possible.
What is a good credit score and poor credit scores are two different things. But, they are not always the same. Knowing your score and keeping track of any changes can help you in many ways. It may take a little time to learn how all the numbers fit together, but keeping track of what’s going on with your finances can only benefit you in the long run.