What Does Your Credit Score Mean?

Everyone has a credit score - but what does it mean? Lenders use the credit rating system to determine the amount of credit risk you currently represent as a potential borrower. There are several factors in your credit history, including length of credit history, number of open accounts, loans, mortgages, public records, and others which are weighted and used in a calculation to produce a three-digit score between about 300 and 950.

Often lenders will use a combination of your credit score with several other factors when determining your credit worthiness. The individual credit score places the borrower in one of three main categories : Prime, sub-prime, and out of luck (we named this last one ourselves).

• Prime: Individuals with credit scores higher than 680 are considered a "prime borrower" . If you are in this category, you'll have no problem getting approved for a good interest rate on your home loan, car loan, or credit card. 
• Sub-Prime: IIndividuals with credit scores less than 680 are considered "sub prime", and will usually pay a much higher interest rate on loans and credit cards.
• Out of Luck: If your credit score is below 560 - You may still get a credit card but you will often have to plunk down a security deposit or high acquisition fee. In addition, your interest rate will likely be 22 to 23%. At this level you may as well forget about most home loans and most new car loans at this score. Below 560 is not where you want to be if you want to have financial freedom and security. With a low credit score, you will pay much, much more in higher interest and unnecessary fees. In addition, you may even pay more for your insurance rates, and a very low score can even prevent you from getting a job with many companies. If you're in this category Click here for information about how to improve your credit score.

Don't know your credit score? Order your Experian Free Credit Report now and find out your credit score and where you stand before you apply for a credit card, loan or personal credit line. Get your report from the "big three" credit bureaus free and just pay if you choose to continue after a 30-day trial period. 

  
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