Financial Education

 

 

Credit Rating

Credit Scores
A credit score is a rating used by a lender to help determine whether you qualify for a particular credit card, loan, or service. Credit scores are calculated using the information in your credit file, which is analyzed using a complex mathematical model to calculate your credit score. Applicants receive points for factors indicating that they are likely to repay their debts. The higher your score, the more likely you will be able to get credit cards, loans or services and to be offered desirable rates.

Lenders Know Your Score—Shouldn't You?
Most credit scores estimate the risk a company takes on by lending you money or providing you with a service -- specifically, the likelihood that you will fail to make payments in the next two to three years. The higher the score, the less risk you represent.

Because your credit score is one of the most influential factors in deciding whether to grant you credit, knowing your score can be indispensable when you apply for a loan.

If you purchase your Score Power® from Equifax, which includes your credit report you also receive an easy to understand explanation of your credit score including your percentile ranking as compared to the national population.

General Range of Credit Scores
Most credit scores can range from 300 to 850, but the majority of scores usually fall within the 600s and 700s.

Since there is no universal score cutoff used by all lenders, it's hard to say what a good score is without considering the particular lending decision. For example, a score of 750 may qualify you for a platinum credit card, whereas a score of 675 may indicate that you are a better match for a standard card. Your lender may be able to give you guidance on the criteria that it uses for a given credit product.

Each lender has its own strategy, including the level of risk it finds acceptable for a given credit product, so your score and its implication may differ from one lender to the next.