Don’t just consider your credit score as a financial “grade.” It’s more than that. Your credit score represents something bigger and of more importance. Did you know that this may have a significant impact on your wallet? A lot of first-time homebuyers who apply for mortgage credit certificate texas are quite curious about improving your credit score and how it will play a significant role in applying for a loan.
Understanding Your Credit Score
Using a financial model or an algorithm, credit bureaus such as TransUnion, Experian and Equifax will crunch your personal data and determine your exact credit. This analysis is used to predict your inability or ability to pay any of your future debt. As such, if you are planning on applying for loans, this information is quite invaluable.
Compared to suggested movies on Netflix or stuff on Amazon, the algorithm in calculating your credit score can’t be ignored. After all, it is a reflection of your credit history, the inventory of things that you have paid for. The past loans, credit cards, and even government information are all your sources which consist your history. Some of the other info include your number of loans and credit cards that you have, including whether or not you are paying for your bills on time.
Your credit report may not be what you expect it to be. It includes your social security number, personal information, the amount you owe and whether or not you’ve been a delinquent or have been late on your payments. Lending institutions, as well as businesses, usually want to know about your credit score.
But how is it calculated?
- Looking at your credit report
- The amount of available credit that you have
- How much money you currently owe
- Your repayment history
- And the length of your credit
Add all of these, and you get a score which you will be using in getting a loan and securing a lower interest rate as well as down payment. After all, you shouldn’t ignore a difference of one percent. This may mean thousands of dollars which you have to pay throughout your loan. It’s quite a big deal so you should know how to improve your score and what’s a good credit score.
What’s a Good Credit Score?
A score of 720 and above is considered excellent credit. A 660 to 719 score is a good one while a 620 to 659 is fair. Anything that’s below 619 is of poor standing. So what do these mean?
- 740 to 799 – This is a very good score and is above average. It will most likely help get a better-than-average interest rate for a loan.
- 670 to 739 – This is the average score in the US, so if you have a credit score between these numbers, you’re considered to be an acceptable borrower.
- 580 to 669 – It might be a bit hard to get a loan with this credit score, and if you ever get a loan, you’ll need to pay a higher interest rate.
- 579 and below – It’s unlikely that you will find a loan with these numbers.