![]() Learn More Factors that determine your credit score Make sure to check your report at least once or twice per year to catch any errors. Your credit report - which lenders also look at - offers a more complete view of your payment history and determines your credit score. Your credit score is only part of your financial picture. Some employers even ask to look at your credit history before making a hiring decision. Other things your credit score can affect include insurance premiums, cable and internet accounts, cell phone purchases, and your ability to rent an apartment. Your credit score doesn't just affect your ability to borrow money. In some cases, you may not qualify for financing at all. A lower credit score could cost you more over time because you may not qualify for the best interest rates or fees from a lender. If you have a higher credit score, creditors see you as less likely to default on your debt, so the lender is more willing to give you lower interest rates and better loan terms. Lenders look at your credit score when you apply for personal loans, home loans, auto loans, student loans, and credit cards. Generally speaking, your credit score may not directly affect your daily life, but when it does matter, it really matters. When it comes to credit scores, there are often two camps of people: those who think a credit score is worth everything, and those who think it doesn't matter at all. What’s the worst credit score you can get?įor most scoring agencies, the lowest score is 300, but depending on the scoring model, credit scores can start from as low as 250. But generally, the highest credit score is between 800 and 850 at most credit reporting agencies. What’s the best credit score you can get?Ĭredit score ranges vary depending on the credit scoring agency. You could start with a very high credit score or a lower score, depending on your first six months of credit history. Once people do start to build credit, then their score is based on how responsibly they've used their credit to date. Sometimes this will also be referred to as having a "thin credit file." If you have never taken out any credit or have a credit history that's shorter than six months, you won't have a score at all. While it's not possible to have a credit score of 0, you can have no credit score. May be charged a higher interest rate than other borrowers May have difficulty qualifying for credit.May be charged a higher interest rate than some other borrowers.May sometimes have difficulty qualifying for credit.Likely to qualify for reasonable interest rates.Likely to qualify for lower interest rates.Likely to qualify for the lowest interest rates Each has slightly different scoring standards, so you could realistically have at least three different scores. Even with the regulations, there are three major credit bureaus (TransUnion, Experian, and Equifax). The Fair Crediting Act specifies which information the credit bureaus can collect and use as part of your credit score. The first automated credit scoring model appeared in the 1950s, but it wasn't until Congress passed the Fair Credit Reporting Act in 1970 that the process was regulated. For instance, you can have more than one credit score, and not all lenders use the same credit reporting agency to decide if they'll lend to you or not. It sounds simple enough, but there are some credit score basics that are important to understand. If you have a higher score, lenders consider you to be more trustworthy when it comes to the likelihood that you'll pay back the money you borrow. If you have a low credit score, lenders consider you more of a credit risk. Sometimes you'll also hear it referred to as a measure of your creditworthiness. The short answer: a credit score is a three-digit number that tells lenders how much risk you pose as a borrower when you apply for a new line of credit. How to check your credit score for freeĬredit score basics: What is a credit score?.Factors that determine your credit score.
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