How to Interpret a Credit Score Scale
It can be overwhelming and confusing to try and completely understand your credit score rating scale. In a credit scale, you have a lot of different categories of numbers that all mean something very different. However, the better you understand your credit score scale and the factors that go into it, the easier it will be to fix it.
Credit score scales range from 350-850 at the three different credit bureaus. These credit bureaus include Equifax, Experian, and Trans Union. Your credit score scale will determine the level of risk that potential lenders will place on you for using a loan or handling credit. The higher the score the less risk, and the lower the score the higher the risk and so on and so forth.
To give you a general idea of how your credit score ranks with others here is a quick overview. A score of seven hundred or higher on the rating scale is considered excellent and should have no problem with interest rates, credit, or payments. Scores that range between four hundred and fifty and six hundred and fifty are on the lower end; you can still get credit although you might run into a few problems here or there. Anything below four hundred and fifty will have an incredibly hard time getting approved for anything. Those that fall in this category definately need to improve or raise their credit if they want to have any chance at all of obtaining credit.
Below is a credit score scale guide that will give you some more information on how credit scores are determined, and how you can best interpret your own credit score.
- When putting your credit rating score scale together, companies looke at a few different aspects. Probably one of the biggest factors of how your credit scores scale is put together is your past payment history. Your past payment history includes late payments, number of credit cards, number of loans, amount of the loans etc. Also if your debt to income ratio is high it can lower your credit rating. To go along with your past payment history would also be just your credit history in general. The amount of time you have had credit will be a big factor. If you are just starting out using credit cards and such your credit will probably be very low even if you haven’t missed a payment only because you are a beginner. So not only is it important that you use credit, but that you use it wisely.
- Credit applications and credit inquiries are also considered part of your credit score and will affect you overall rating. If you have too many inquiries or applications it will lower your score and look bad on your report. Other things potential lenders look for are high interest rates on previous loans, and number or balances and specifically the number of high balances. All these can be negative marks to a credit reporter.
After going through all of this information and evaluating your own credit score you can learn a lot about how better to improve your credit. Take the time to do some research and find out how to best help your financial situation.