IS YOUR CREDIT SCORE EXCELLENT, FAIR OR POOR?
Is your credit rated excellent, good, fair or poor? It is important to know what your credit score is before you apply for a car or mortgage loan so that you can work to improve it. If you improve your credit score substantially, you can save yourself thousands in unnecessary interest charges.
Although lenders use your FICO credit score in deciding whether you should be granted credit and at what interest rate, there are other factors that lenders use, such as your level of education, income, and particularly, amount of debt when deciding whether or not to approve your loan. You can use the table below to get an idea of how your credit rates.
If your FICO credit score is
Your credit rating is considered to be
Your credit rating is considered to be 750 - 850 Excellent
Excellent 660 - 749 Good
Good 620 - 659 Fair
Fair 350 - 619 Poor
PoorIf your credit score falls in the "excellent" range, you probably will be offered the lowest interest rate available provided that you do not have too much debt.
If your credit score falls in the "good" range, your loan will probably be approved but at an interest rate two or three points higher than those with excellent credit.
If your credit score falls in the "fair" range, you might have difficulty getting credit, but even if you do get approved for financing, your interest rate will be substantially higher than those with excellent credit scores, meaning you will pay $200, $300 or even $400 more per month more on an average 30-year mortgage and about $100 more per month on a car loan. If your state allows it, insurance companies can charge you substantially more, sometimes twice as much for auto and health insurance. It would be wise for you to improve your credit score as quickly as possible.
If your credit score falls in the "poor" range, you probably filed for bankruptcy or have defaulted on debts. It will be difficult for you to obtain credit; however, if you do obtain credit it will be at extremely high interest rates. Those with poor credit are often the victim of hucksters and immoral companies who prey on consumers who can't get traditional financing, charging them outrageous interest rates, fees, and such for auto loans, credit cards and payday loans. Those with poor credit definitely need to improve their credit scores!
If you want to qualify for the credit and loans you need, why not start improving your credit rating the legal way? Congress enacted legislation in the 1970s that gives all consumers the right to a fresh start; the right to build an excellent credit rating and not have to suffer their entire lives for mistakes made long ago. This legislation is called the Fair Credit Reporting Act.
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