IS MY CREDIT SCORE GOOD OR BAD?
Our Basic Guide to Credit Scores
If you are thinking about applying for a loan or trying to buy a new house, you will come to know how important it is to have a good credit score. But what exactly is a good credit score? If your score is too low, how do you improve or repair your credit? It all depends on the standards of your lender, but many sources, including Experian, generally agree that a good credit score is 700 or higher.
Credit scores typically range from 300 to 850, so if you have a score anywhere within the 700 to 850 range, that is great news! However, if your score falls below 700, you might encounter some issues when applying for a loan. Fortunately, there are plenty of ways to improve your credit, and it all starts with understanding how credit scoring works.
What Factors Affect My Credit Score?
The biggest factors that impact your credit score are the number and severity of late payments, the type, number and age of your accounts, your total debt and your public records, including bankruptcy, civil judgments and tax liens.
If you frequently make multiple late payments on credit card bills and other bill payments, you could be severely damaging your credit score. Because lenders are trying to determine how reliable you are, they are looking to prove that you can pay them back and will not default on a loan.
Lenders cannot discriminate against a person based on their age or any other protected traits, but they may still judge your reliability based on how long you have had your accounts. If you have incurred significant debt, no matter how long it took to incur, that debt might be a factor in determining your credit score. Furthermore, if your debt has forced you file for bankruptcy, this may also negatively impact your credit score.
I’m a Responsible Person. Can I Still Get a Loan with A Bad Credit Score?
Even the best of people can fall on hard times and see their credit scores dwindle. Unfortunately, lenders must look at the numbers when deciding who to issue loans to. While there is a possibility of obtaining a loan with a credit score below 700, the best bet to increase your chances is to work on repairing your credit score.
How Do I Improve My Credit So I Can Get a Loan?
Fortunately, even if bad credit is in your history, there are ways you can turn your past into a bright future. The first (and probably best) tip to improve your credit score is to start paying your bills on time as soon as possible. Bad credit scores are not permanent. So, if you can prove you are doing your best, you will start to look like a person who can be trusted in the eyes of lenders. Secondly, if you are keeping an eye on your credit report, you will be able to track your progress much better. You can learn more about how to improve your credit score here.
If you have any questions or concerns about your credit score, do not hesitate to reach out to First State Bank. We are happy to be of assistance in any way we can!