What is The Average Credit Score?
The credit score, also known as a FICO score, is a statistical or numerical interpretation of the information
contained in your credit file, based on a standardized formula. It was created by Fair Isaac Corporation. The credit score typically comes from Experian, Equifax and TransUnion
( the three major credit reporting agencies). An individual's
credit score represents the credit worthiness of that person.
The three digit score indicates a borrower's ability to repay a
loan, estimating the level of risk a lender will have to accept.
The score is based on the individual's payment history, amounts owed, age of credit history, recent loans, and the types of credit
that the individual has. Despite the fact that the financial future of almost every
American is dependent on their credit ratings, very few of us
have actually seen our credit reports, therefore, most people
are not aware of their credit scores. Credit scores range
roughly between 300 and 850. But the average credit score for
borrowers in the United States is 723. And this figure varies
with each state. Minimum credit score requirement varies from
lender to lender. Some lenders will allow risky financial
behaviors ( but penalize you with higher interest rates), while
others are very strict with credit requirements and eventually
reward good financial management with good rates. There are
several advantages of maintaining a credit score at or above the national median of 723.
Definition of good credit score varies from lender to lender.
While it is imperative to maintain a good credit rating and score,
you should not beat yourself over having a not-so-good credit. You will be able to find someone
or company to give you a loan regardless of your credit score.
If your credit is poor, you may have to pay higher interest or
down payment or collateral. Any fico score that is greater
than 700 is generally considered a good credit score.
It is advisable to inquire from your lender what their
definition of a good credit score is.
What Can Hurt
Your Credit Score?
Several factors can hurt your credit
score. A few of them that are taken in consideration in the
calculation of your credit score are I) Number of Credit
Obligations II) Past Payment Performance, III)
Credit Utilization ( Amount You Owe and Available Credit)
IV) Total Available Credit V) Length of Credit History
and VI) Credit Inquiries. Late payments, collection
accounts, high debts,
repossessions, judgments, bankruptcies and foreclosures can negatively affect your credit score. An individual's payment history makes the largest part
of credit score calculations. So make your payments on time.
Who is Looking At Your Credit Report?
Almost anyone or company that extends credit to you takes a look at your credit.
Some of these companies include your bank, credit card companies, apartment owners (Landlords),
cell phone carriers, mortgage companies, payday loan companies, your employer and a host of other companies.
The United State law allows you to order one free copy of your
credit report from each of the nationwide consumer reporting companies every 12 months.
You can place your order at annualcreditreport.com, or by calling 1-877-322-8228.
You can also complete the Annual Credit Report Request Form
and mail it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
Who's Looking at Your Credit Report? Find out FREE Now at
NationalCreditReport.com
