An Average Credit Score - It Is Important When Borrowing
The average credit score is the rating that the 3 major credit
bureaus assign to your credit report. It is based on your
borrowing and repayment habits and depends on how much money you
owe and how many times you have applied for credit. If you have
a low credit score, there are ways of improving it. In general,
an average credit score tells creditors that you are a good risk
for them to lend you money.
Computing a credit score is a scientific process that Experian,
Trans Union and Equifax use and each one has its own unique
system. The credit score range is between 375 and 900, with
around the 600 mark being the average credit score. In order to
find out what your credit score is, you need to request a free
copy of your credit report. This will give you an idea of what
creditors see when they do a credit check on you.
If you find that your average credit score is below 500, then
you are in the lower part of the credit score range. It also
means that you have to take steps toward improving credit
scores. For example, if you plan to look for a loan for a new
car within the next year, you should start now by making a
diligent effort to pay all your bills on time. If you apply for
a loan, even if you are accepted based on your earnings, every
person that asks for your credit score shows up on your credit
report. This deters some creditors because they think you are a
compulsive borrower.
The higher your credit score, the better chance you have of
being granted credit. This is why you should always know what
your credit report says about you and what your average credit
score is. The credit score range you fall in not only determines
whether or not you get a loan, bit it also determines the
interest rate you have to pay. When you understand what
creditors are looking for, you can work towards improving credit
scores. When your average credit score is good, you will save
money in the interest rates charged on the loan.
An average credit score is fine, although you can always do
better.