As a credit repair specialist, the question I hear most often is "what's a good credit score?".
It seems that everyone cares about their credit score these days, with
interest rates lower than ever and the easy money lending environment we have
now that comes with low rates.
The good news is, it is easier to get that loan for your house or car than
ever before.
"Oh No, I Have a 622 Credit Score!"
Recently, I went to purchase a triplex to live in and keep as an investment,
and when I got to the lender's office I found to my horror that I had a middle
credit score of 622. I will explain this in a moment, but even though this
score was considered "bad" a few years ago, it turned out to be ok.
Your Middle Score
What do I mean when I say I had a middle credit score of 622? There are three
main credit bureaus, and banks are now in the practice of looking at your credit
scores from all three bureaus, and then using the "middle credit
score" as an indicator of your credit performance. They order a
report that they call a "Tri Merge" or a 3-in-1 credit report. There
are actually six main companies that banks like to use to provide this type of
report, although there are many companies out there that will sell reports to
the public. If you order a 3-in-1 credit report on your own, the banks will
still insist on ordering theirs from one of their preferred companies. Once they
discover your middle credit score, they use this as a very important indicator
about your creditworthiness. Your credit scores can make or break your home loan
or credit application.
What Does My Credit Score Mean?
Generally speaking, having a 650 credit score or higher means that you can
find many home loans at a good rate, and having a 720 credit score or higher is
the "holy grail", the highest score category where you can qualify for
all the best loans like zero percent down or 125 percent financing. Credit
scores go all the way up to 850, and all the way down to 350.
However, things change with time. Where a few years ago only the people
with a 720 credit score got the best loans, today even people with a 620 credit
score or over have plenty of options for home loans at a decent rate. Even
people with a 580 or more can enjoy a new home loan today.
As I found out, my 622 credit score in 1/2005 Sunday can remember him
in her I get him out and get a fair and I think it can do is beginning: you a
lot yowasn't so bad after all.
How To Qualify For a Home or Car Loan
Who has the best credit? The answer is, people who have three lines of credit
open, no 30 day lates, and no more than 30 percent of their credit card balances
owing. these are the people who will have a 700 credit score or more. What if
your credit record is not so good? I had a friend who lost her job and that
divorce at the same time. She had 10 lines of credit open and four of them went
into a delinquent or "charge-off" status. The term charge-off means
that the credit card company "gave up" on collecting the debt.
My friend felt very ashamed about her past, and for six years avoided looking
at her credit. When she finally got her credit report she found that she had a
620 middle credit score, very close to mine. Even though I had 11 accounts where
only one was 30 day late. The credit score looks mainly at your last 18 months
of behavior, so even though she had four delinquencies in her past her credit
was still considered ok. She qualifies for a home or car loan.
A Good Credit Score
However, to summarize some of the points made here, for the best credit make
sure to 1) have 3 credit lines open 2) pay off 30% of your credit card
balances and 3) avoid 30 day lates at all costs.
If you need a good credit score in a hurry, check out my e-book
Improve
Your Credit Score In 24 Hours.
About the Author
L. K. Hughes is author of the best-selling book "Improve Your Credit Score In 24 Hours".
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