| When it comes right down to it, we are just a | | | | for example, you'll find lenders referring to the |
| number. There used to be a time when people | | | | "middle score." Upon looking at your credit reports, |
| applying for a loan would be judged by the Three | | | | you might find, hypothetically, that Experian gave you |
| C's; namely, Credit, Collateral, and Character. Yes, | | | | a score of 630, TransUnion 610, and Equifax 634. |
| there was a time that you could get a loan just | | | | In this case, your "middle score" is 630, and would be |
| because the banker liked you. | | | | the basis on which your creditworthiness is judged. In |
| Times have changed. With the age of technology, | | | | essence, the high and low scores would be "thrown |
| everything has become impersonal, including the | | | | out" and disregarded. Note that not all lenders work |
| lending business. The Three C's have been reduced | | | | this way. Some will take only your lowest score, |
| to one: Credit Score. Your best chances of obtaining | | | | some will take only your highest, and some might |
| a loan, then, depend on your understanding of this | | | | consider a combination or average of the three. |
| vaunted number. | | | | The important thing to remember is that your score |
| Your credit report is a report card of how well you | | | | is only a number, a common denominator to which |
| manage your debts. Like your grades in school, the | | | | everyone can relate. Just like the weather, everyone |
| higher your score, the better your chances of | | | | can relate in terms of the degree of temperature. |
| success. | | | | However, the interpretation is relative. For example, |
| Scores range from 300 to 800, with most credit | | | | 80 degrees might be considered hot to one person, |
| reports scoring in the range of 480 to 760. There are | | | | and it might seem cold to another. Similarly, a score |
| three major credit reporting agencies. They are | | | | of 630 might be considered "good credit" by some |
| Equifax, Experian, and TransUnion. Each of these | | | | lenders and "bad credit by others. |
| three credit bureaus has its own proprietary formula | | | | With all these different interpretations and variables, |
| for calculating your credit score. | | | | one thing is for absolute certain. Having the highest |
| Similar to being judged at a figure skating | | | | credit score possible is your very best bet. The |
| competition, each bureau has its own interpretation | | | | ramifications of having a high credit score are |
| of your "performance" as a borrower. Factors that | | | | enormous. With a high score, you can qualify for |
| go into calculating a credit score include your | | | | lower interest rates, lower down payment |
| payment history, the quantity of your open | | | | requirements, and faster loan processing times |
| accounts, the ratio between your credit limits and | | | | among other numerous benefits. In other words, it |
| outstanding balances, and lender inquiries to name a | | | | can NEVER work against you to have the highest |
| few. | | | | possible credit score. With it, you can achieve savings |
| How does your score work in terms of getting a | | | | of time and money that translates into thousands of |
| mortgage? Different mortgage companies have | | | | dollars per year, every year. |
| different ways of interpreting your score. Commonly, | | | | |