Interpreting Your Credit Score

Interpreting Your Credit Score

Interpreting Your Credit Score

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A credit repair company in dallas says, Knowing where you stand financially is key when making future credit based decisions. If your credit score is low, you’ll need to start making necessary repairs before you try to apply for any future credit. If your credit score is in good standing, you’ll need to keep best practices in mind to keep your score in top shape.

 So what makes a good credit score? Often that depends on the type of credit line you’re looking to obtain in the future. Generally speaking, however, the higher your score, the lower your interest rate, and the better the terms of any future loan will be no matter if you’re borrowing for a house, an automobile, or a revolving line of credit.

 The lower your credit rating sinks, the higher the interest rate will be for any future loans. And, if your credit score plummets, getting qualified for any loan at all may be very difficult to do. Knowing your credit score and taking all possible steps you can to help it climb is the best medicine for faltering credit.

 

Ratings Explained

There are two kinds of rating systems: FICO and VantageScore. For all intents and purposes, the two systems are very similar in their scoring algorithm. All scores fall within a range of 300 to 850. Any score above 750 is considered EXCELLENT. Scores between 680 and 749 are labeled GOOD. Interest rates start to climb with any score that falls below the GOOD threshold. If your score is 620 to 679 your score is considered FAIR. And 580 to 619 is BAD. Believe it or not there is a label for anything under 580: POOR.

750 to 850       EXCELLENT

680 to 749       GOOD

620 to 679       FAIR

580 to 619       BAD

300 to 580       POOR

 

Looking For A Mortgage?

Interest rates for home mortgages are highly dependent on the current state of the housing market and the prime interest rate set by the federal reserve. Generally speaking though, if you have a credit score of 720 or higher you should qualify for an interest rate of around 4% or lower for a 30 year fixed mortgage. Which is always good to improve your credit score any chance you get.

 

Looking For An Auto Loan?

Auto loan interest rates can fluctuate widely depending on the deal of the day and your credit score. Before you shop for cars, take a good look at your credit score, and shop around for auto loan financing through your bank or other banks before walking into the dealership. New car loans tend to fetch lower interest rates than used car loans for people in good credit standing.

 

Looking For A Business Loan?

If you’re starting a new business, a lending institution will assess your personal credit rating to determine if you qualify, and assess terms of a potential business loan. For some kinds of business loans, such as equipment loans, qualifying may be a little easier since there is collateral involved.

For established businesses, institutions use a business based algorithm to assign you a business credit score of somewhere between 0 to 100 for future lending decisions.