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Credit Scores – Do You Pass or Fail?

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As a numeric value, your credit score is meaningless unless you know the value assigned to each number. Just as a test in school was assigned a grade based on a range, your score will fall into one of six grades – poor, bad, average, good, great and excellent to effectively evaluate how well you’re doing in managing credit. The standard and most relied upon is the FICO score with a range of 300 to 850. Special scores are designed for specific needs, such as FICO scores for auto loans with a range of 250 to 900. A medium score is approximately 710 but the good news is that most consumers fall with the 700-800+ range.

How does your Credit Score Rank?

800+ Credit Score
There is no such thing as a consistently flawless credit score because everyday actions affect it both for good and bad. But anyone with a score over 800 should be proud to have earned the highest FICO ranking that only 13% of consumers achieve.

760-799 Credit Score
One out of four consumers has a credit score of 760-799. If yours falls within this range, you can relax as your rate is considered excellent and generally earns the same great interest rates for loans and credit cards as those with scores about 800.

720-759 Credit Score
Here is an example of how a few points can make a difference. A score of 720-759 is just as acceptable as a higher score in most situations. One exception may be when you apply for a mortgage where a score above 760 will earn a lower interest rate. So if you’re in this bracket and hoping to buy a new home, it would be worth the effort to work towards reaching that 760 threshold.

680-719 Credit Score
This range encompasses scores at the higher end that are still considered good; while the lower end is troubling to some lenders. Far from ideal, most loans and credit applications will be approved but interest rates may not be the most desirable. You may also be scrutinized more thoroughly before a decision is made whether to approve a new bank loan.

660-679 Credit Score
Considered an okay albeit below average score by many lenders, this range may include more restrictions when borrowing. These consumers may also see fewer approvals. The cost of borrowing will be higher for those with scores lower than 660.

620-659 Credit Score
Scores in this range are closing in on negative from the vantage point of lenders. A score of 620 is considered the dividing line between creditworthy borrowers and subprime borrowers. Some credit card issuers won’t extend credit to people with credit scores below 640 and loan approvals may depend on factors over and above your score and require a co-signer.

580-619 Credit Score
Now you’ve entered a below average bracket that can doom your chance of getting a loan or credit card and even impacts whether you’ll be approved for an insurance policy or even that great new job opportunity. Even if you do get approved, you’ll be paying high rates with strict terms that will be extremely costly. Many people with credit scores in this range are considered “subprime” and may have to work with bad credit banks and lenders to secure financing.

Credit Scores Below 579
There is no question that your credit score is in need of serious credit repair. People with scores this low are in serious credit trouble and often have ongoing problems that may include foreclosure, bankruptcy, multiple collection accounts and poor management habits of paying late or defaulting. If your score is below 500, lenders won’t even consider you for a loan or line of credit. The only option you’ll have is to be put on someone else’s account or hope that a co-signer will be sufficient assurance for a lender to approve you for a loan. If your credit score is below this level, you may want to consider speaking with a professional about your situation.

If you’re struggling to raise your score, be patient; it’s never hopeless. Evaluate your credit and begin to change how you manage your bills – paying on time and more than the minimum due each month and never open a new account until you have a firm handle on your current debts. Don’t hesitate to seek professional help from a debt counselor who can put a plan in place to help you repair the damage and raise your score.

Congratulations if your score is above 700! Keep up the good work in maintaining your responsible financial lifestyle. Never take it for granted but periodically monitor your scores to insure accuracy. You’ll enjoy the best interest rates, terms and benefits on your future credit needs.

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