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