If you are a consumer then you know what a credit score is. A credit score is based on a consumer’s credit history. It evaluates how a person is credit worthy. It provides information that determines if an individual is financially responsible with managing earnings, spending, loans, and bills. Having a good credit score plays a key role in managing your finances because lenders use the score to determine if you are capable of paying debt and handling serious financial obligations.
FICO and Vantage Scores
The most common credit scoring system used are FICO and Vantage. FICO is an acronym for Fair Isaac Corporation. Most financial institutions use FICO because of the standard scoring system that they have created. Many lenders also base their decisions on Vantage’s credit scoring model. VantageScore is a product of credit bureaus: Experian, Equifax and TransUnion.
Good Credit Score
FICO and Vantage use a credit score range between 300 to 850. A score that starts from 690 and up is generally a good credit score. You have excellent credit score if it ranges from 800 and above. Good to excellent credit score gives confidence to lenders that for them to end up with a positive decision. Creditors and lenders have their own different range in defining credit scores but generally here is a standard look at the credit score range:
720 and above = Excellent
690 to 719 = Good
630 to 689 = Fair
300 to 629 = Bad
Credit Scores Affect Your Life
Your credit score can affect your finances and your life too as a whole, your work, even your relationships. It can influence your career, your family, where you can live and a lot more. Having bad credit can disrupt your chances of getting a much needed loan. Your credit card application can be denied, you may not be able to take advantage of contracts and flexible plans for a car loan, house loan, phone, cable, internet, rent, etc.
Employers also check candidate credit reports to measure their trustworthiness which can affect job applications. You will experience higher interest rates for insurance and credit card payments and lower credit limits compared to those who have good to excellent scores. In general, your credit history is a reflection of your attitude towards your finances. A good credit score will allow you to have more options, advantages and opportunities. Your financial status greatly influences your everyday life and it is a serious matter that demands focus and attention..