What does my credit score mean?Learn About Credit 101: Lesson 3 of 4What does My Credit Score Mean? Under 500 The lowest category – It’s usually a sign of bankruptcies, foreclosure, collections, charge-offs, etc. It’s very difficult, if not impossible, to obtain credit. If you are able to find credit, it will require you to put up large portions in cash or equity. If you accept the offer, it will force you into paying ridiculous interest rates as well. 500-599 Bad credit – Typically due to late payments, charge offs, medical collections, etc… If you get financing, you are then required to pay large closing costs. You will also be charged very high interest rates due to the risk the lender undertakes in lending you money. 600-649 Fair credit – You will find unfavorable terms in financing, but there are more sources made available to you than the previous category. 650-700 Good score – However, with today’s tighter lending standards, there are less products available to meet the unique needs of borrower. You may be forced into agreeing to terms that you would otherwise not consider. 700-719 Great credit – Lenders want to loan you money. You are a good credit risk and will receive favorable financing terms. However with today’s tighter lending standards, you may not have low documentation type loans available to you without proving a substantial amount of equity in the transaction. 720 or higher Excellent credit – This is the category where opportunities arise with any type of financing that may be available. This should be the goal of every consumer. At National Credit Federation, we will teach you how to not only obtain, but maintain this excellent score. It may take some time and discipline, but everyone can eventually achieve this score if equipped with the proper knowledge. |