What Is The Meaning Of “Credit Scores”
In today’s world your “credit scoring” record is incredibly important to you, even though you may not know very much about it.
Your scores, there are three of them, will often dictate whether you can buy a car or a home AND they will dictate the interest rate you will pay.
Credit scores are not new. They were created back in the 1960’s to help retailers and auto dealers quickly determine whether you were credit worthy for their purchase and financing. The concept became much more important when their application was expanded to home financing in the 1970’s.
What do the scores 350 to 850 mean? The lowest credit score that anyone can receive is 350. I’ve never seen one. The highest score that anyone can receive 850, and I’ve never seen one. Here is a snapshot of what your score means in general terms:
| 350 – 450: | Very, very poor. Many collections probably,many recent late payments, maybe a BK or foreclosure, or possibly very little credit history but it is all negative. |
| 450 – 620: | Poor. Probably some recent late payments,balances on revolving accounts that exceed the maximum credit limit, collections and judgments, and either pages of negative credit or very little only negative credit. |
| 620 – 680: | Average. The lowest acceptable score for an “A” paper mortgage is usually 620. The average credit score in the U.S. is in the high 670’s. Here your credit history will usually have some negative items (30 day lates) but they are probably from several months to several years ago. You will also have many perfect accounts with low or zero balances. |
| 680 – 700: | Outstanding. You are instantly viewed as an outstanding credit risk having managed your credit experiences very well. You may have a few 30 day lates, but they were some time ago and you have remained perfect in the past few years. You also keep your account balances on your revolving cards below 50% of your highest credit limit. Good job. |
| 720 – 750: | Exceptional. We love you and you love yourself! Probably no lates, good management of your debt, and probably very little debt. You also do have ample credit history. |
| 750 – 850: | Stratospheric. “Off the Charts” You may want to frame your credit report. But, you will never receive that 850 score. The only person that could have gotten that score has his birthday celebrated every Christmas. In fact, the low 800’s is quite rare. Congratulations! |
