In America, some purchases that involve the extension of credit and loans are done based on the available credit score range. Some financial institutions across the globe use FICO credit score system.
This system created by erudite mathematicians’ places people in varying degrees of risk, especially when apply for a credit or loan.
The credit score of a person determines whether the person will get a loan or not. it also depends on the volume of interest, the person will pay, and establishes a person’s risk if he fails to pay back the loan.
Understanding the real meaning of a credit score will help anyone aspiring to obtain a loan in the near future. This will also help the person in mapping out strategies to enhance their score.
Factors affecting credit score range
Some factors are involved when you are calculating the credit score of a person; the first is the person’s payment history. If the person has a poor payment of credit cards, utilities, and loans, this will go miles in affecting the person’s credit score.
The second is calculating the amount that is owed. Keep in mind that this calculation is solely based on the person’s credit analysis, so if the person owes a big sum of money in the past, and just cleared it off, this may as well affect their credit score, such that it may not be improved significantly until the person maintains a steady payment of credit history.
The third is the type of credit the person has used. FICO and VANTAGE usually calculates a credit that extends from 300 to 850.
Things Associated With Free Credit Score
Certain things shows why a person is in a particular range, and shows what the person should do so as to be in a higher credit score.
Any person having a score of 850 is considered to be having a perfect credit, such a person is eligible in getting the best deals and discounts anytime they make a large purchase. Usually, they have an unused emergency credit card. They are consistent in paying their credit cards monthly. Their major concerns are how to clear off the oncoming months bills. They buy things in bulk when they have enough money in the bank that will help them in paying off the loan any time any day.
It is an excellent risk for someone to fall within the range of 700 or above. More so, companies provide these people with discounts and reduced interests anytime they make large purchases. Just like 850 people, they don’t make purchase that they won’t pay with accumulated savings. These people are reluctant in taking risks, and they do not use credit cards anyhow. They try to save for every purchase whether it is small or large.
Some people are within the range of 580 to 619, this is bad but not very unpleasant, and 629 to 679, this is ok, though not great. Both groups have some similarities. There are some bad patches for those at the minor range. It could be an ongoing medical issue that affected the person from paying for an unprecedented five years or it could be as a result of losing someone’s job- these are some of the things that will make the person not to pay the debts for some months.
These groups can use their cards as back-ups when funds get tight. Normally, they don’t have much money in savings. They purchase a lot of things on credit simply because they don’t have savings. Most times, this type of people keeps mingling from paycheck to paycheck. I learned to check my credit score free after watching this.
If they have an issue, they will try to get a loan that will help them in covering it. Usually they stay in a particular job for a very long time, and only leave when they are fired or laid off. The job in question is only maintaining the person’s lifestyle, not increasing it.
Since the advent of the economic recession in the United States, a lot of people keep finding themselves within the credit score range of 500 to 580. Some of them are really living on ‘credit’ edge. Either they are unable to clear off an ongoing debt or that they have been laid off recently.
Getting a loan in this credit range is an uphill task, and when the person eventually secures the loan, the interests are astronomical. It could be a frightening experience for people within this range, getting out of this will demand dedication and determination. It will be better to improve your credit score by having a rate that will offer you more opportunities and better interest rates. Some victims of this range have witnessed bankruptcy at least once, and most of them don’t stay in a particular job for long time. They use even their retirement savings, if they have it. these people keep living from paycheck to paycheck on a daily basis, and they don’t have any savings to solve a significant issue requiring immediate funds.
It is bad to fall within or below the credit score range of 499. These people always faces steady financial crisis. Most times, they have filed bankruptcy at least once, and they have not been paying their credit loans as and when due. Their expenses are higher than income, and they are not even sure how they were able to manage from one month to another. Normally, their worries are not about how money comes or goes.
Improve your credit score values
Irrespective of the credit score range you are, you can still upgrade to a better credit score, which will offer you better credit rating. If you wish to increase your credit rating, try the much you can to seek a professional advice, so that your scores can be raised as quick as possible.