What does your credit score mean?

How important is your credit score? If you're buying a house or applying for a job, it can be critical. Your credit score help lenders determine what interest rate you will be given.  Many insurers also use your credit score to determine your premiums. A low score can even prevent you from renting the apartment you want or, worse; make you ineligible for certain jobs.  Surprisingly, with so much riding on this number; very few people understand what their numbers really mean.  Your credit score can be found on your credit report, so you first need to obtain a current copy.  There are three major reporting agencies in the US: Experian, EquiFax, and TransUnion.

The point system used ranges from 330 and 850.

• 800 – 850 Credit Score
  In this range is basically flawless credit.  An important thing to note here is that some consumers may have 800 credit scores the minute their credit profile is established, but without supporting credit history, the score will mean very little to banks and lenders.
• 720 – 799 Credit Score
  In this range is considered great credit, and will typically result in interest rates and approval rates that a credit score in the range of 800-850+ would yield. Therefore, credit scores in this range are considered excellent and you really don’t need to worry if you scores fall in this category.
• 680 – 719 Credit Score
  A score in this range is considered good credit. Although it’s not perfect, you should still be able to qualify for most loans, auto or rental lease.
• 620 – 679 Credit Score
  Credit scores in this range are still considered “good” or “ok” by many creditors, though you may see some restrictions.  Scores at this level are fairly common, and no reason for alarm.
• 580 – 619 Credit Score
  In this range are considered below average, and you will have a difficult time securing a loan, or applying for a credit card. If you are able to secure financing, you’ll find higher interest rates for low credit scores.  If your credit score falls in this range, you need to evaluate your credit report.  Many consumers with credit scores in this range are considered “subprime” and may have to work with bad credit banks and lenders to secure financing.
• 500 – 579 Credit Score
  Credit scores in this range are considered bad.  There’s a good chance you have a number of major derogatory marks on your credit report such as a collection, charge-off, mortgage late, judgment, a foreclosure or a bankruptcy.  You must evaluate your credit and act immediately to turn things around. You’re clearly paying higher interest rates and making credit mistakes that will impact your life for years to come.
• 499 and Below Credit Score
  To fall into this range, your credit report will definitely contain major derogatory marks, with very little positive data.  If your credit score is at this level, you may want to consider speaking with a professional about your situation.  Start educating yourself immediately to alleviate your problems.