- Credit Score Crash Course
Amazingly enough, someone's life can be drastically affected by three numbers. Here's a crash course on what they are
and what consequences they can bring.
- You sit down to look at your credit report for the first time. If you’re scores are above 730, congratulations! You have
excellent credit; stop worrying. If you’re scores are not above 700, no problem—let’s get to work. Take solace in the fact
that the national average score is around 676 according to the Gallup Organization. If you’re scores are below 400, 500, or
600, there’s definitely room for improvement and only one way to go—up!
- If the numbers I have mentioned don’t make any sense to you or you have no idea what they mean, don’t fret—I’ll explain.
Credit scores range from 300 to 850. Two of the three of the credit bureaus—Equifax, Experian, and TransUnion—offer
FICO credit scores using a complex mathematical formula developed by Fair, Isaac and Company, but they each give the
scores a different name: At Equifax, the FICO is known as the Beacon credit score; at TransUnion, it’s called Empirica;
Experian no longer offers the FICO score.
If you’re credit scores are above 730 you have excellent credit and will able to get the best interest rates available. As your
credit scores drop, the interest rate you’ll receive for a home loan will rise: this is known as tiered pricing. The more of a
risk the lender takes on you, the higher your interest rate will be. In addition, all lenders have their own break points
between tiers. What this means is that one lender may raise the interest rate if a score drops below 700, while another
lender won’t give a higher rate until the score drops below 690.
In summation, you should do everything in your power to maintain good credit scores, and be sure to shop around and do
your homework when looking for a home loan because all lenders are not created equal. I think you have already gleaned
the moral of the article but just in case you haven’t, here it is: Good credit scores save lots and lots of money, and be sure
to choose a lender wisely to get the best rate for your scores.
- Credit Article by Linda Adams - The Clean Credit Queen
Good Day and Good Credit
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Linda Adams, The Clean Credit Queen is not a registered investment advisor and the information provided on this website should be considered educational in nature, but it is not a substitute for legal or professional financial advice. If you believe you need the help of a Certified Financial Planner or other investment counselor, please seek a qualified professional. |
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