Personal Finance and Investing

A credit score is a score used by every credit institution to decide whether or not to grant you a loan of financing. The higher the credit score, the higher you are viewed as being a good debtor and shows that you are good at repaying what you borrow and won’t cause them to lose money. On the flip side, if you have a poor credit score, companies will be afraid to grant you loans or financing because they believe you will end up defaulting on what you borrowed and cost them a lot of money in the end. So, now that you know what a credit score is, where do you fall?

1. 800-850+
   With this rating you are showing that you are an excellent person to give loans too and you will most likely be approved fast and get a low interest rate
2. 720-799
   This is also a very good score, you will most likely be approved and also have a lower interest rating.
3. 680-719
   This is a good rating but not as good as the other two levels, so while you will be approved your interest rate will be higher then those top two.
4. 620-679
   This is an ok credit rating. You might not always get approved for credit, if you do, your interest rate will be higher.
5. 580-619
   This is a below average score and you will have a lot of issues being approved for loans or financing.
6. 500-579
   This is a bad credit score. This usually includes reports of foreclosure and bankruptcy. If you have this score you need a lot of improvement.
7. Under 500
   VERY bad score and you will not be approved for any loans or financing from anyone.

You can find out where you fall by using a free credit report system. Credit agencies are required to give consumers one free credit report every year. So you can fill out a form for them and they will give you’re your credit score so you can see what your chances are of being approved for anything before you even apply.

Also, this free credit report will help you find out if your credit score needs repairing or establishment.  You can also use a free credit score report to find out if there are any mistakes on your report like for instance someone else having used your name to get credit for something or reporting errors. If there are such mistakes you can then open up a free dispute to dispute these errors.

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