posted by colin1234
by Christine A. Mathews

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 (Equifax, Experian, and Trans Union) all have their own way of determining your credit score. But they each use the same standard scoring system to show how credit worthy you are. It based on FICO, an acronym for Fair Isaac Corporation. That’s why you’ll often hear people use the term “FICO Score” when talking about credit scores.

The truth is, lenders won’t always ask for credit reports or credit scores from all three credit bureaus when you apply for a loan. Fortunately, since the “big three” all use the same FICO system, a score of 680 from one is thought to be the same as a score of 680 from the other two credit bureaus. Even so, it’s a good idea to review your credit report from each one, as sometimes mistakes are made. When that happens, you should contact the credit bureau to have them corrected.

Credit Score Ranges - What Is Considered 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.

A score of 650 or better usually means getting credit approval will be simple and quick. It shows that you have a very good credit history. As I said earlier, this also means you will probably have very good terms on any loan you get - another reward for handling your past debt responsibly.

Scores between 620 and 650 are considered average. This means your credit is basically good. If you fall into this range, lenders will tend to look for any possible credit risks before approving a high credit limit or large loan amount. You may find you have to provide additional documentation and explanations when applying.

Chances are good that you will be able to get credit at a good rate and decent terms. It’s just that instead of quick and easy, it can take a little longer to get approval.

Don’t panic if your credit falls below 620. It doesn’t mean you will never get credit. The right lender may still be willing to give you a loan, but you need to accept that your interest rate will likely by higher and terms won’t be as good.

About the Author: As you can see, your credit score plays a big part in the type of credit you are able to get. If you find your credit score isn’t as high as you’d hoped, don’t despair. There are things you can do to improve your credit rating starting today! To learn more about personal credit and how it works, visit http://CreditHelp.ImprovingYourFinances.com