Debt Consolidation Credit Counseling In Phoenix

When you apply for credit, one of the first things a lender will check is your credit score. If you know what your credit score is before you apply, you'll have a better idea of what to expect in the loan process.

In case you don't already know what a credit score is, let me explain...

Your credit score is a number the credit bureaus use to rate just how credit-worthy you are. They look at both your past credit history and how well you are handling any current debt you may have.

The three major credit bureaus are Experian, Equifax, and Trans Union. Each one has it's own method of deciding what your credit score is. Then they use a scoring system to show how good you are at handling credit and paying your bills on time. They all use the same scoring system - FICO - which is an acronym for Fair Isaac Corporation. That's why many people will use the terms "credit score" and "FICO score" interchangeably.

Lenders don't always check all three credit bureaus to decide whether or not to offer you credit. But since Equifax, Experian and Trans Union all use the same FICO scoring system, a score of 720 from one is considered equal to a score of 720 from the other two. That said, it's always wise for you to check your credit report directly from each credit bureau. Mistakes are possible, and you'll want to correct them as soon as possible.

Where Do You Fall - What Is A Good Credit Score?

FICO scores range from 375 to 900 points. A higher score is typically considered a better risk. So the higher your credit score is, the easier it will be for you to get credit and the better the terms will be.

While each lender has his own criteria to follow, here is a general guide that shows how credit scores tend to rank.

If your credit score is 650 and above, this usually indicates very good credit history. This means you will probably find getting credit approval is quick and easy. Another bonus for having very good credit is that the terms of your loan will likely be very good, too.

If your score is between 620 and 650, you are considered to have generally good credit. That said, your lender may ask for additional documentation or explanations before approving large loans or extending a high credit limit. They are simply doing their due diligence, looking for any possible credit risks before final approval.

Also, instead of being quick and easy, your loan may take longer to close. But there is a good chance you will still be able to get credit at a good rate.

If your credit score is below 620, this doesn't necessarily mean you won't get credit. But you should realize that the interest rates and terms of your loan will probably be less desirable, due to your low credit rating.