Understanding Your Credit Score 

A credit score can be a confusing number but a very important number when deciding to apply for a loan. A credit score is a number that lenders use to estimate risk. You may sometimes also hear this number referred to as a FICO score. This comes from the company who created the scoring system way-back-when, the Fair Isaac Corporation. The higher your credit score, or FICO score, the better your loan interest rate will usually be. Lenders rely on this number heavily because they know that borrowers with higher credit scores are less likely to default on a loan. The more you can do to improve your credit score over time the better your chances will be of securing a mortgage loan, personal loan, or debt consolidation loan. And the better your chances will be to get a loan with a low interest rate! 

Understanding Your Credit Score When Applying for a Loan

Credit scores are generated when companies input the data from your credit report into software that analyzes it and generates a specific number. There are three main reporting agencies from which credit scores are generated, Transunion, Experian, and Equifax. Credit scores can vary from company to company but should usually be within range of each other. If there are large differences in scores it is important for you to follow up with each company to correct any errors on your credit report or those showing in your credit history. If you don’t get the scores corrected this may affect a lenders decision to give you a personal loan, mortgage loan, or debt consolidation loan. 

What Kind of Credit Do You Have? 
Credit Score Ranges (FICO Score) 

>750	Excellent Credit
660-749	Good Credit
620-659	Fair Credit
<619	Poor Credit

Remember, just because you may have a low credit score now and have to apply for a poor credit personal loan or mortgage loan, doesn’t mean your interest rate will be high. Watching how you spend and manage your credit card and loan balances can make a BIG difference in improving credit score. Doing the right things for your credit can put you on the path to a better financial future! 


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Other Credit Score & Loan Articles: 

How to Avoid a Bad Loan 

Get a Personal Loan with Bad Credit

Improve Your Credit Score

Understanding Your Credit Score

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