Credit Rating
What Is A Credit Rating?
Your credit rating is a number that many lenders and potential creditors use to decide whether or not to extend you credit. They also use it to determine the interest rates and terms they’ll offer you. There’s quite a few factors that go into determining your credit rating.
The Big 3 credit bureaus are TransUnion, Experian and Equifax. Lenders and creditors report their transactions to these bureaus, and then they access these records to decide upon an individuals credit worthiness. Some potential creditors will access just one report. Others will access all three.
What Is A Good Credit Rating Number?
The number that is generated for your credit rating is also know as your FICO score. Your FICO score is a number that ranges from 300 to 850. 300 would be bad, 850 would be great! This number is the easiest way for a potential lender to judge how high risk you are. There is a formula for calculating your particular FICO score. – the percentage of available credit you are using – how much credit you have open, and for how long – payment history and delinquent payments – size of debt and credit.
If your credit rating is lower than 550 you will have a hard time getting credit, or pay extremely high rates. Anything under 500-550 is considered very high risk. Once you get your credit rating over 600 you will have an easier time accessing credit. And above 750 lenders are more than happy to extend you credit.
It’s easier to access your credit report and FICO score thanks to the internet. Before you apply for a loan, mortgage or any other major credit, make sure you check your credit rating first.