Tag: credit scores

Credit Score Range

Credit score range is typically between 300 and 850. Within that range, scores can usually be placed into one of five categories: poor, fair, good, very good and excellent.

Poor Credit Score

A poor credit score is typically defined as a score between 300 and 579. A score in this range indicates that you may have difficulty obtaining credit or loans, and if you do, you may be charged higher interest rates. If you have a poor credit score, it’s important to take steps to improve it. Some ways to improve your credit score include paying bills on time, keeping credit card balances low, and disputing errors on your credit report.

Fair to Good Credit Score

A fair credit score is typically defined as a score between 580 and 669. A score in this range indicates that you may have difficulty obtaining credit or loans, and if you do, you may be charged higher interest rates.

A good credit score is typically defined as a score between 690 and 719. Scores 720 and above are considered excellent, while scores below 630 fall into the bad credit range.

If you have a fair credit score, it’s smart to try to move it well into the good credit zone. Moving your credit score from fair to good gives you access to better financial opportunities: With a higher credit score, you may be able to get better interest rates on loans, insurance and credit cards. You’ll also have access to credit card offers with better rewards, cash back and maybe even 0% interest rates.

Excellent Credit Score

According to the FICO credit scoring model, an excellent credit score falls between 800 and 850 points. The VantageScore model categorizes an excellent credit score as anything above 781.

Having an excellent credit score can help you qualify for the best interest rates on loans, credit cards, and mortgages. It can also make it easier to get approved for rental applications and other financial products.

How Does A Home Loan Affect Your Credit Score?

The impact of getting a mortgage on your credit score can vary depending on your individual credit history, financial situation, and how the mortgage application process is handled.

Credit Iquiries

When you apply for a mortgage, the lender will pull your credit report, resulting in a hard inquiry on your credit. A single hard inquiry may have a minor negative impact on your credit score, typically causing a decrease of a few points. Multiple hard inquiries in a short period, such as when shopping for mortgage rates, are often treated as a single inquiry to minimize the impact on your score.

Credit History

The length of your credit history is a factor in your credit score. If you have a short credit history, the impact of a mortgage application may be more significant compared to someone with a longer, well-established credit history.

Credit Utilization

Taking on a large mortgage can increase your overall debt, potentially affecting your utilization ratio. However, making timely payments can help mitigate this impact over time.

A mortgage application is just one aspect of your financial picture. If you have a solid financial history and manage your mortgage responsibly, the impact on your credit score may be minimal or even positive.

It’s important to note that any initial drop in your credit score due to a mortgage application is typically temporary. With responsible financial management, your credit score can recover and potentially even improve over time as you demonstrate your ability to handle mortgage debt. However, it’s crucial to maintain good credit habits, like making payments on time and managing your overall debt load, to ensure that your credit score remains in good standing.

Positive Score Factors

Delinquencies on your accounts.
A delinquency is a payment that was made 30 or more days late. None or very few delinquencies on your account can cause your score to improve.

What You Can Do
Keep paying bills on time every month since it is important for maintaining a good credit score. If you remain behind with any payments, bring them current as soon as possible, and then make future payments on time. Over time, this will have a positive impact on your score. Continue reading Positive Score Factors

Maintaining Good Credit Habits

– Don’t max your credit cards
– Keep a healthy credit utilization ratio (most creditors consider a ratio of 35% or lower as healthy)
– Make your monthly credit card payments on time
– Keep tabs on your scores and check your credit report regularly

In general, keeping a low balance on your credit card or paying your credit card off each month is ideal. However, letting your credit cards sit idle, without activity, it may not benefit you as the creditors have nothing to report.