Which credit score range do you fall under? The scores in these ranges are determined by a number of categories and your financial picture is rated against them. The ranges can be broken down into 3 basic levels: low, medium and high and your credit report will have you assigned to one of these levels.
Low – scores are 560 or below. Lenders will see you as high risk and most likely won’t work with you at all unless you will accept obscenely high interest rates.
Medium – scores range between 560 to 720. The lower end of this range is still considered risky, but a possible candidate for a loan depending on the situation. The higher end is considered ‘Good’ and you’ll be offered loans at a decent rate.
High – scores are from 720 and above. Lenders see you as a dependable borrower and will offer loans with the lowest interest rates. The closer you are to 800 and above, the more exceptional you are in terms of your financial stability.
Credit Score Categories
These 5 categories are what determine your credit score range. All credit account and loan history that exists under your name and social security number is rated against these categories in specific percentages.
Payment History 35% – Your ability to make your payments on time. Are there missed payments? How many and for how long? If all payments are paid on time for many years, this is a strong indication that you are a highly dependable consumer.
Balance Amounts 30% – How much you owe in relation to how much credit you have. This category takes into account how high balances are on certain types of accounts. If you have maxed or near-maxed balances on credit card accounts, that shows you are relying heavily on credit to make ends meet. This will not work in your favor.
Length of Credit History 15% - In general, the longer you’ve used credit wisely with long-term accounts, the better your score will be.
New Accounts 10% - New credit is okay and actually helps your score as long as you don’t open too many in a short term period.
Credit Account Types 10% – A mixture of credit types is good, as long as you are making use of them. For instance a mixture of credit cards, mortgage loan, installment loan and finance loans shows a history in a variety of financial activity. This will work in your favor as long as you don’t have too many.
The least amount of information needed to get an actual credit score is six months of history on a single account with no flagged activity such as late payments. It is important to check on your credit reports occasionally to make sure reported information is accurate.
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