You're graded in school. You're ranked in sports. You're even rated online. Seems wherever you turn, someone is judging you. The same is true in the world of finance. Your credit score is your own personal rating system that tells lenders whether or not you're likely to repay a loan.
Credit scores range between 300 and 850, with a score of 700 or greater considered excellent credit. Under 620 is usually where the trouble begins - you can get credit, just not at very good terms.
The following quiz uses a similar scoring system. And just like in the world of credit, you'll get rewarded for a point total in excess of 700.
The higher the credit score, the better your chances for loan approval.
A perfect credit score (850) allows the borrower immediate access to unlimited credit.
One universal credit scoring system is used by every single credit union in the country.
Your credit score updates annually on January 1st.
Individuals with poor
may still be approved for a loan
may pay a higher interest rate
may be required to provide collateral and/or
all of the above
To approve a loan,
lenders may take into account factors other than your credit
score, including which of the following:
Numerous credit report
inquiries can have a negative impact on your credit score.
A potential employer
may reject your employment application based on your credit score.
An indication of bad
credit will remain on your credit report for up to 12 years.
When making a loan
decision, the lender will often look at your debt ratio in conjunction
with your credit score. A debt ratio is typically calculated
assets by liabilities
liabilities by equity
monthly debt payments by monthly income
total debt in good standing by total delinquent debt
A credit bureau is:
a type of credit union
an independent organization that provides
credit scores to financial institutions
a large vault that contains the credit history of every borrowing American citizen
a government agency that audits credit files
The Transparent Bankruptcy Act (TBA) of 2008 prevents any and all bankruptcies from having a negative
impact on your credit score.
Some online lenders
can approve you instantly by accessing your credit score.
If you find incorrect
information on your credit report:
don't panic, most lenders will recognize it as incorrect information
you should contact the reporting agency
directly to have it fixed
leave it alone - trying to correct it may lower your credit score
you will need to apply for a new social
Credit scoring systems
periodically for legal compliance
routinely updated to reflect current U.S.
approved annually by the U.S.D.A.
all of the above
Did you break 700? Click here to see your credit score.