Understand How Credit Rating Score Is Measured

Thursday, August 13, 2015, AM | Leave Comment

A credit rating is a simple number which many lenders use to determine whether or not they will give a loan or line of credit to an individual. In addition, the interest rates are different for different credit ratings.

The higher the credit ratings, the lower the interest rate you might be able to get the loan for.

One’s credit rating is impacted by a number of factors, some of which are controllable, others are not.

Understand How Credit Rating Score Is Measured

Get your free annual credit report now to know what your credit rating or credit score is.

Then, take steps to improve your credit score.

You might have credit ratings that are excellent, good, fair or poor. Each category of credit ratings is described below:

  • Excellent

    You have excellent credit if you…

    • Pay all of your bills on time, all of the time

    • Have not made a late payment on your mortgage in the past two years (if applicable)

    • Do not have a large dollar amount of unsecured credit lines open

    • Have had no bankruptcies, liens or judgments within the past seven years

    • Have had no late payments on your credit cards, auto or consumer loans in the past year

    • Have had one or no late payments reported to a credit bureau in the past seven years

    • Have not been reported to a collection agency in the past ten years

  • Good

    You have good credit if you…

    • Usually pay all of your bills on time

    • Have had fewer than three late payments reported to a credit bureau in the past seven years

    • Have had no late payments on your mortgage in the past year (if applicable)

    • Have had no bankruptcies, liens or judgments within the past seven years

    • Have not been reported to a collection agency in the past ten years

  • Fair

    You have fair credit if you…

    • Have had less than three late payments on credit cards, auto or personal loans in the past year

    • Have a history of late payments that are consistently sixty days or more over due

    • Have had no bankruptcies, liens or judgments within the past three years

    • Have had one or two credit problems

    • Have had no more than one late payment on your mortgage in the past year (if applicable)

  • Poor

    You have poor credit if you…

    • Are over 18 years of age with no credit history

    • Have a history of late payments

    • Have had more than three late payments on credit cards, auto or personal loans in the past year

    • You have had a bankruptcy, foreclosure or lien within past three years

    • Have had a few late payments on your mortgage in the past year (if applicable)

In a Nutshell
This blog and others have many articles posted on the subject of how to improve your credit score. Read and follow.

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