These days, your credit score is critical in many areas of your life: Getting a home or car loan, applying for credit cards, getting a good rate on your insurance, and even getting a new job are all affected by that three-digit number.
What Is a Credit Score?
A credit score is a number between 300 and 850 that lenders use to determine whether to extend you credit, the amount of credit you qualify for, and even the terms (interest rate, loan amount, repayment schedule). Generally, scores over 700 are considered excellent while scores below 600 are considered poor.
The score is determined by the three leading credit bureaus: TransUnion, Equifax and Experian. Your creditors — the companies, lenders, and organizations that lend you money and extend credit to you — report information to them such as your credit limit and whether you pay on time. Each agency keeps its own records so your score can vary from bureau to bureau. For a mortgage loan, generally the middle score is used.
Why Is It Important?
Beyond securing a home mortgage loan, credit scores are often used in determining prices for auto and homeowners insurance. Employers have also begun using the scores as part of background checks when making hiring decisions. The practice of using credit scores in nontraditional ways is expanding. It’s more important than ever to educate yourself about credit.
Stay tuned for more information and tips about improving your credit.* Let’s get you closer to your goal of homeownership!
*We are not a credit counseling or financial advisement firm. This information is for educational purposes only and is not to be taken as guidelines or guarantees to improve your credit or financial situation.
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