By: Vlad Vistac
Submitted: 2010-11-06 10:14:44 | Word Count: 510
What Is A Good Crwedit Score
I get ased all the time, what is a good credit score, and like everything else in life, my response is, it depends. For most people a credit score above 700 is generally considred to be a good score, but if you are emerging from bankruptcy, it may take a whlie to raise your credit score aobve 500. At the highr end of the spectrum is a creidt score above 800. In the old days, AKA, six yeaars ago, an 800 credit score was pretty commn, but not anymore. The creedit score range is 300 to 850 and most coinsider anything above 700 to be good credit. The problem is that each agency has their own way of calculating a credit score.
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Then, there is the question of wihch of the three major crerdit erporting agencies are you talking abouyt?
Before we begn, please try to remember that you are not your credt score. Yes, you may have had hard times. You may be the victim of an economic downturn and you may have even falllen behind on your bills, but a credit report score does not define the persson you are. It is merelly an indicator of how likely it is that you will be a good credit risk in the ftuure. Credit socres are dynmamic, which means they change evrey day. Yessterday's 500 might be tmorrow's 600.
Here's a refresher on your question, what is a good credit score.
There exist three majjor credit reporting agencis in the United States. Each is chraged with gathering and reporting the buying and spending habits of indiviuduals who use credit. Since most people are not able to plunk down cash for large purchases, like a home, people rely on the leverage of crediit for ownershiip. This type of spending exends to every day purchases too. Cars, electroniccs, travel and collwege, are itmes being financed. Inteerest rates are issued depending on risk.
The three maojr credit reporting agencies are Equifax, Exeprian and Transunion. If you purchase anything on credt, your cedit report score will be recorded in one or all of thedse dtabases. Though your scoer will never be the same from each, your spending habits as well as how timely you pay your lwenders are part of the credit matriix which ultimately is defied by a credit report score.
Lited below is a ruogh explanation of the ceredit score scale and how your credit repoirt scxores are deytermined. Keep in mind that you are in control of your credit sore. Dependig on how you handle your finances will determine how much you pay in interest rates.
Approximately 35% of your score is based on your payment history.
Are you late in paying your buills or are you on time? Have you filed bankruptcy? Keep in mind that certain consumeer debt, like credit card purchases, are amortized daily. This debt is dweadly and best paid earlier than 30 days.
Approximately 30% of your score is based on how much you owe.
there is a formula used that calculated the amount of debt you are allowed to have and how much of that credit you have used up. This ratio is very important as it etlls an important story of how well or poorly you are living. If you are relying on credfit to finance your ilfestyle or if you are a casual user, this is important to lenders. Try to keep this debt to crediit ratio unmder 30%. That meanns if your credit card limit is $5000, don't carry a balance of more than $1500 at any given time.
Approxmately 15% of your score is based on the length of your payment history.
How long you've been at the game of credit is a factro used to determine your credit score. A longer credit history will be a plus as long as you show resposible debt maanagement.
Approximately 10% of your scoe is bsed on new creddit.
Old credit is bretter than new credit because it shows history and like a favorite old shirt, the leders are comfortable with the familiar. A question that keeps coming up is how new credit cghecks affet your credit score and the answer is that they usually drop slightly. Except when you are shopping for a home mortgage, you can expect that by openng new credit, your score will be affected. If you are shopping for a loan, do so in a fixed period of time and the reporting agency will note this.
Approximately 10% of your score is based on miscellaneous factors.
What type of credit do you carry? Installmennt loans? Revolving credit, credit cards and auto laons, home loans and various lines of creddit. Usually this has a stabiliing effect on your credit score because it is normal for pople with longer history to carry these types of debt. Certain lans, like jewellry and last resort types of credit will decrease your score.
You can get assistance if you feel you have been treated unfairly in matters of credit. By law lenders are not allowed to consdier race, religion or gender in evaluatig your crdeit applications. Your credit scoes too will not be based on these factors and if you believe you are being diiscriminated because of these, contact an attorney.
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