If you are an adult and own a credit card then you probably know what a credit score is. A credit score is a number that is used to show the creditworthiness of an individual. A credit score of a person can be anywhere between 300 to 850. The higher the credit score is the more the advantages are. It will be very difficult for you to get loans if you have a low credit range. This is because the financial institutions want to lend money to someone who will pay it back on time. They do not want to lend money to people who are late on their payments. Some people do not understand the impact that the credit score range has on your financial situation. There are a number of advantages if your credit score range is high.
You will be more likely to get a new credit card or a loan if you have a high credit score. Not only that but the financial institutions will actually lend you money for lower interest if your credit score range is good. You may have been already aware of your credit score range but may not know it’s effects on your life. Did you know that your credit score can influence the chances of you getting a new line of credit? If you know your credit score range then you can predict if you qualify for a loan or not. It is better to know about the score that plays such an important part of your financial life.
Stick till the end of this article to know about the credit score range.
Who determines your credit score range and how do they do it?
The first thing you need to understand is that there are no particular institutions that provide you with one credit score. Instead, there are several companies that keep the records on the financial information of people and create their credit reports. There are a few large agencies that provide you with credit scores that are widely accepted. Equifax, Transition, and Experian are the three most reputed credit card bureaus. Not just these credit bureaus but there are several other small credit bureaus that track your financial data to create credit reports for different niches like tenant screening, business credit, and more.
You have to understand that you will not have a single credit score at any particular time. This because the credit scores are calculated by various sources considering their own components. So each of the credit bureaus will report a credit score that is slightly different from others. Apart from credit scores, there are few companies that offer credit score meters. Credit Sesame and CreditWise are some of the popular companies that provide these credit meters. Using these applications you can check your credit score for free.
What are FICO scores and Vantage scores?
As mentioned earlier these credit scores offered by individual credit monitoring bureaus are different from each other. This is because these companies collect data from financial institutions separately. But what you have to understand that the information accessed by these companies is not the same. Because the financial institutions are in a position to choose if they want to share your data or not. Due to this these companies may or may not get access to your information from the financial institutions. So the information that these credit monitoring bureaus get is not the same as the others. This will have a huge impact on your credit score. To be as accurate as possible these credit card companies use the formula licensed by FICO. These companies use this formula to produce credit scores. This is the score that was mentioned cannot. It can be anywhere between 300 to 850.
This is the score that is used by many lenders. Usually, a credit score above 800 is considered excellent. VantageScore also provides a type of credit score. This score is developed by the three major credit monitoring bureaus Transunion, Equifax, and Experian. VantageScore 3.0 is the latest model used by these companies to provide credit scores. They also have a score that ranges between 300 and 850. A VantageScore above 780 is considered to be excellent. This is also a score that is used by many lenders.
How does one track their credit score range?
There are many ways in which you can track your credit score range. You can either get premium accounts on some platforms or you can use the platforms that are absolutely free. There are a number of applications like Credit Sesame and Credit Karma that will provide you with your credit score range for free. These platforms are not only good at providing credit score ranges but they are also great at monitoring your credit. This one of the easiest ways to keep track of your credit score range. All you have to do is sign up for these applications for free and know your credit scores.
Everyone is entitled to one free credit report every year from all the major credit monitoring bureaus. Keep in mind that these reports do not include your credit score. They only show the information regarding your credit history and the details about all the accounts that are under your name. If you keep track of your credit report regularly you can make sure that there no errors in it. In case you don’t use any of the applications to check your credit score you can contact your bank. There are many banks that provide tools to their customers to monitor their credit score or offer FICO scores for free.
If there is anything you should know about after reading this article other than understanding credit score ranges that is maintaining a good credit score. You can follow some simple steps to increase your credit score range. Make sure that you repair your debt on time. Having a high credit score will not only get loans but also increase the amount of money you can loan. A good credit score ensures that your credit limit is not slashed.