The three digit number that is your credit score holds great importance in determining your future ability and position related to your financial issues. These 3 digits will determine your borrowing ability such as, how much you can borrow, interest rates and you eligibility for various things like from zero percent credit cards to discounted car insurance rates.
Credit Score Rules Set by Lenders
It is important to note that different lenders or lending institutions have set forth different guidelines for providing loans. However, all lenders do check your credit score before finally giving you a loan.
Calculate your Credit Score
It is your duty to calculate your credit score to find out your eligibility on the credit eligibility chart of all three credit bureaus. It is because bureaus also calculate your credit score. If your credit score is standing in good position then you don’t have to worry about anything. But if your credit score is bad then you may face problems in acquiring loans. However, if you are a military personnel and having bad credit score then you can do a lot to raise your credit score.
Engage in Credit Repair Practice
It is very important for you to engage yourself in activities that could help you to raise your credit score. The first thing you should do is to check your credit at least once every six months.
FICO credit Rating Model
It is a general; credit rating system, but still many lenders use their particular personalized credit scoring systems. FICO model calculates your credit score on the basis of point system. It measures your previous credit history and debt to income ratio to calculate your credit worthiness. A FICO credit score starts from 300 and ends on 850. If your score is higher than 720 then it is considered as a good credit score, while credit score lower than 550 is considered as bad credit score.
Understand Your Credit Ratings
General there are 5 classifications for calculating and ranking a credit score by FICE. If you have good grades in your credit score then you are eligible to secure lower and affordable interest rates. Following is the rating description of credit score.
A Rating –If your credit score is minimum 720 and above it then it is rated as “A”. it means that your debt to income ratio is lower than 35%, you have been able to maintain a good credit score within last 2 to 5 years, you have not filed for bankruptcy within last 2 to 10 years.
B Rating – If your credit score is minimum 620 and less than 720, then you can qualify for loans but not with lower interest rates.
C Rating – If your credit score is minimum 620 or lower than that then it will be rated as “C”. You will need a co-signer to take out loan.
D Rating – If your credit score is minimum 550, then it is rated as “D”. You will face problems in the approval of loans and will need a co-signer.
E Rating – If your credit score is less than 550 then it is rated as “E”.
