The Credit Score Rating Scale Explained
If you’ve ever check your own credit score, you may have found the scale they use for rating you a bit confusing. There are a bunch of numbers that all have a different meaning. Learning to read your credit score properly means you need to understand the rating scale.
There are several pieces of information reviewed by companies when they build your credit score. These factors include the following:
- Your payment history
- When you pay your bills
- The amount of outstanding debt you have
- The length of your credit history
If you have a great deal of debt or you don’t have a very long credit history, you will receive a lower credit score even if there are no “black marks” against you.
Recent credit application also affect your score. Applying for credit in several places in a short period of time will lower your score, as will having too much high-interest debt.
A score of 700 or higher is considered a good credit score. At this level, you shouldn’t have any problems getting credit, and at a low rate of interest.
A credit score of between 450 and 650 could stand some improvement. You’ll have a harder time finding a loan or qualifying for a new credit card application. You’ll usually require some kind of security as collateral. You’ll also usually pay a higher interest rate because of the perceived risk to the lender.
If your credit score is under 450, your credit needs some serious help. You probably won’t qualify for a loan or credit cards at all at this level.
If you need to improve your credit score, there are lots of places to turn for help. Many credit counseling services are free to use and they’ll help you assess your situation and offer advice for improving it.
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