Understanding Your Credit Score
Your credit score is like a barometer for your financial health. Lenders will use it to determine whether to extend a loan offer. It’s also instrumental for determining your interest rates on loans and credit cards. The better your credit score is, the more favorable interest rates you’ll be able to access. Everyone should know how to interpret their credit score.
Credit Score Ranges
A credit score can be as low as 300 or as high as 850. The higher your credit score is, the better. Anything below 600 is considered very bad. A score between 600 and 650 is considered bad. A fair credit score is between 650 and 700, and a good credit score is between 700 and 750. Anything above 750 is excellent.
Credit Score Types
Your FICO score is developed based on your credit history. When you check your credit score, you’ll get the generic version of it. This is a good way to assess your financial health. However, it’s important to note that some lenders may have access to a custom credit score. Custom credit scores also rely on your credit history, but they may include other factors such as your account history with that particular lender.
Credit Score Factors
Credit score factors are the elements that influence your credit score. These factors include your total debt, the types of accounts that are active, the number of times you’ve missed a payment or made a late payment, and the age of your accounts. These factors are weighted differently, which means that some are more important than others. Your payment history, for instance, accounts for 35% of your credit score. This is why it’s important to always pay bills on time. Your debt level accounts for 30% of your credit score. Your credit score also takes into consideration your credit utilization, or how much of your credit you’re using compared to the total amount available. In other words, if you have a $2,000 credit limit and your balance is $1,500, your credit utilization is too high.
For assistance with wealth management and financing, you can turn to Alpine Bank. This employee-owned bank has been serving the Steamboat Springs, CO area since 1973. You can call Alpine Bank at (970) 871-1901 with your questions.