Where Are You On The Credit Score Range?

There is a range used to define credit scores that the credit bureaus use. The score can be between 300 and around 850. The Fair Isaac Corporation uses the same type of scoring system.

The range is quite diverse. You will want to have a higher number such as 700-800 so that you can obtain credit easily. If you have a very low score such as 300, you will have a great deal of difficulty obtaining credit.

However, take this information with a grain of salt.

The score does not provide the entire picture.

Most creditors look at a multitude of variables before making a decision about credit worthiness.

If you have a good credit score of about 700 or higher you are considered an excellent risk and will most likely be granted credit with very low interest rates.

Even if you have a score in the 600 range, you should not have any trouble obtaining credit. You should not have to pay high interest rates for a loan.

The range of 600 to 680 is considered average. The majority of people across the country have this range. You will most likely obtain credit approval but may have stricter rules and standards for the loan.

A low credit score is a bit more complicated. If you have a score below 600, you certainly can get a loan but at a higher interest rate. There are certainly lending institutions that will offer you loans, but they will be on their terms. You may feel like they have all the power, and actually they do because they can deny you credit.

If you have a very low score you may have some trouble obtaining credit but, you will most likely find a lending institution that will lend you money, or give you credit, for a price. A very high price! You may think, is it worth it?

It may not be. You may want to wait and save your money rather than borrowing from them.

Or, you may want to improve your credit by borrowing from them and paying them back right away, so you do not end up paying high interest charges.

Or, you may want to pay more than what the monthly requirement is.

The credit card company mostly likely will keep track of the payments you make and will hopefully take notice when you pay more than just the minimum requested.

You want to show them you deserve more credit since you voluntarily pay more than you would have to and that you are a good credit risk.

 

Most mortgage companies are reluctant to offer money to people that are tagged as bad credit or do not have enough money to put down as an advance.

Bad Credit home loan refinancing brings in a need to take a look at the problem from another perspective than when having a perfect credit reputation.

The good news is that home loan refinancing is also possible for those with bad credit although the terms will usually be more drastic.

Different problems will appear on your credit history. Examples of things that turn into bad credit can be late payments or low credit scores obtained based on income and possible outstanding loans taken out in the past. In this situation it will be more difficult to get credit but bad credit home loan refinancing is a reality today and you can still get some substantial benefits.

A FICO Credit score below 640 usually translates into the impossibility of getting bad credit home loan refinancing on a value of above 80 percent.

Fortunately for most individuals with this problem, different companies will issue bad credit home equity loans for refinancing even when the credit score is under 580.

However, the obligations the borrower has will be strict and he/she will have to pay higher rates.

Also, if you have a collection account that is in pending status (that means that it needs to be paid), the lender will ask that you solve that problem before talking about bad credit home loan refinancing. Be sure to analyze and solve the problems mentioned above before applying for bad credit home equity loans.

As you can see, individuals that think that they will not be able to take advantage of home equity loans because of bad credit score can in fact do this. There is actually a separate market that is specialized in bad credit home loan refinancing and similar needs when dealing with bad credit. The only real problem you might be faced with is the fact that in the majority of cases there will be a need to have money for a down payment. It is common practice for companies to require this type of advance. In most cases, when dealing with bad credit home loan refinancing, you will have to put a down payment of 3 to 5 percents of the desired loan amount. Many individuals choose to borrow money from relatives or friends in order to meet the need of a down payment.

Most mortgage companies will not finance people that have bad credit but as you can see, there are many that do. The biggest problem you might have is finding it.

Especially in the case of smaller towns, you might be faced with the possibility that bad credit home loan refinancing is not available in your area. This means that you will need to look for it in other locations, which leads to money spent in transportation and various other expenses.

On the other hand, by utilizing the services of a mortgage company that is specialized in bad credit linked home loan refinancing you will actually get your loan approved much faster than when dealing with banks or regular credit unions.

As already mentioned, this also means that with bad credit home loan refinancing you will also need to pay higher interests but the benefits you gain from the amount of money obtained might lead to you getting your credit score up on the long run. If you can do this you can then deal with banks and credit unions for further home equity loans. You need to make a sacrifice in order to raise your credit score and gain the benefits that offers.

by guest author - Jon Ochs

 This is one of my most favorite articles that I have written because it addresses so many questions that people have about credit. I love watching the eyes of my clients widen when they find out the truth about some of these most common myths.

 You will be hearing some things that will most likely be the opposite of what you currently believe. Keep in mind that credit and credit reports are not widely understood, and even those in the financial and credit industry, often do not have a good understanding. With that in mind, let's get started

 Myth 1: Paying off collection accounts, tax liens, judgments, or late payments will remove the negative item from my credit reports.

 This is simply not true. In fact, by paying off an old collection account, you can actually lower your credit scores. The reason for this is because more recent negative items will hurt your score more than older negative items. If you pay off an old collection account, not only will the collection account remain on your reports as a paid collection, but it will now show a current date, and cost your more points. I am not suggesting that you should not pay off your delinquent accounts, only that you need to understand the consequences so that you can factor that into your decision.

 Myth 2: If I pay my total credit card balance every month, I will raise my credit scores.

 Keep in mind that the credit system is designed by the creditors, to help them determine if you are a good credit risk, and if you are an optimal credit user (one who uses the system in such a way that it will generate revenue for the creditors). By paying off your accounts every month, you are not establishing a history of optimal credit usage. What your creditors want to see, is someone who pays slightly more than their minimum monthly payment every month, on time, with only occasional balance pay-downs. This behavior will optimize your credit scores.

 Myth 3: Repairing credit is illegal.

 This is far from the truth. In fact, credit repair is legal for you to do on your own, or hire anyone you choose to do it for you. Repairing your credit is a right protected under the Fair Credit Reporting Act (FCRA).

 Myth 4: Consumer Credit Counseling will improve my credit.

 We have all seen the statements made by credit counseling companies that state that their program will improve your credit. I can tell you that this is false. When you enroll into a credit counseling program, one of the first things that happens is a statement is inserted into your credit reports for each account included in the program. This statement will say something like "payments made through credit counseling", or "client in CCCS". This statement itself may not cost you any points; however it is looked at by the lending industry as very negative. It is like putting a sign on your forehead that says, "I can't pay my bills!" In addition, most credit counseling programs will make your payments late, and this will then cause you to have late-pays, which will cost you many points on your credit.

 Myth 5: Negative items have to stay on my credit for 7 years because that is the law.

 This is also false. There is no law that dictates the duration that an item must remain on your credit reports. The only thing that dictates that an item must remain on your credit report is that it can be proven to be 100% true and accurate.

 Myth 6: If you make a lot of money, you will have great credit.

 Your income does not play any direct roll in determining your credit scores. In fact, statistics show that large percentage of high-income earners have sub prime credit. Your credit scores are made up of several factors including payment history, account balances, types of credit in use, etc.

 Myth 7: I must have excellent credit because I have never been late on a payment.

 Your timeliness of payments does make up 35% of your credit scores, but the other 65% is made up of other factors that are not related to making your payments on time. It is important to understand all those factors to maximize your scores.

 Myth 8: Your credit reports from all 3 major credit bureaus will be the same.

 This is not true. In fact, most of the time, all 3 of your credit reports will differ from one another. The reason for this is that each of the credit bureaus is a separate independent company, and the processes at each are different. Also, some creditors may only report to 1 or 2 bureaus, but not all 3. In my experience, your reports will very rarely be exactly the same.

 Myth 9: Once you are married, you and your spouse share the same credit.

 False! This is something that many believe, but it is absolutely not true. Every individual has their own unique credit reports. You may share some credit items with your spouse if you have joint accounts.

 Myth 10: Closing credit card accounts will increase your credit scores.

 This is one of the biggest surprises that I see happen to people all the time. You go to your mortgage lender and they instruct you to close some accounts in order to qualify for a loan. You do as you are told, but only to see your scores plummet almost immediately; sometimes by more than 100 points. What happened? The reason for the drop was because you just closed some of your oldest and most valuable accounts as far as your credit scores were concerned. Remember, the longer you have had an account in good standing, the more positive points it will provide. It is not advised to close a long-standing account unless you have good reason.

 Armed with this new knowledge, you can now get started putting it into action to improve your credit, as well as share it with others.

 Jon Ochs is the founder/CEO of NCA Credit Repair Inc., a nationally recognized and trusted Credit Repair Company. For more information about building your credit, or credit repair, visit the website at http://www.ncaCreditRepair.com