As a credit repair specialist, the question I hear most often
is "what's a good credit score?".
It seems
that everyone cares about their credit score these days, with
interest rates lower than ever and the easy money lending
environment we have now that comes with low rates.
The
good news is, it is easier to get that loan for your house or
car than ever before.
"Oh No, I Have a 622 Credit
Score!"
Recently, I went to purchase a triplex to
live in and keep as an investment, and when I got to the
lender's office I found to my horror that I had a middle credit
score of 622. I will explain this in a moment, but even
though this score was considered "bad" a few years
ago, it turned out to be ok.
Your Middle Score
What do I mean when I say I had a middle credit score of 622?
There are three main credit bureaus, and banks are now in the
practice of looking at your credit scores from all three
bureaus, and then using the "middle credit score" as
an indicator of your credit performance. They order a
report that they call a "Tri Merge" or a 3-in-1 credit
report. There are actually six main companies that banks like to
use to provide this type of report, although there are many
companies out there that will sell reports to the public. If you
order a 3-in-1 credit report on your own, the banks will still
insist on ordering theirs from one of their preferred companies.
Once they discover your middle credit score, they use this as a
very important indicator about your creditworthiness. Your
credit scores can make or break your home loan or credit
application.
What Does My Credit Score Mean?
Generally speaking, having a 650 credit score or higher means
that you can find many home loans at a good rate, and having a
720 credit score or higher is the "holy grail", the
highest score category where you can qualify for all the best
loans like zero percent down or 125 percent financing. Credit
scores go all the way up to 850, and all the way down to
350.
However, things change with time. Where a few
years ago only the people with a 720 credit score got the best
loans, today even people with a 620 credit score or over have
plenty of options for home loans at a decent rate. Even
people with a 580 or more can enjoy a new home loan today.
As I found out, my 622 credit score in 1/2005 Sunday
can remember him in her I get him out and get a fair and I think
it can do is beginning: you a lot yowasn't so bad after all.
How To Qualify For a Home or Car Loan
Who has the
best credit? The answer is, people who have three lines of
credit open, no 30 day lates, and no more than 30 percent of
their credit card balances owing. these are the people who will
have a 700 credit score or more. What if your credit record is
not so good? I had a friend who lost her job and that divorce at
the same time. She had 10 lines of credit open and four of them
went into a delinquent or "charge-off" status. The
term charge-off means that the credit card company "gave
up" on collecting the debt.
My friend felt very
ashamed about her past, and for six years avoided looking at her
credit. When she finally got her credit report she found that
she had a 620 middle credit score, very close to mine. Even
though I had 11 accounts where only one was 30 day late. The
credit score looks mainly at your last 18 months of behavior, so
even though she had four delinquencies in her past her credit
was still considered ok. She qualifies for a home or car
loan.
A Good Credit Score
However, to summarize
some of the points made here, for the best credit make sure to
1) have 3 credit lines open 2) pay off 30% of your credit
card balances and 3) avoid 30 day lates at all costs.
If
you need a good credit score in a hurry, check out my e-book Improve Your Credit Score In 24 Hours.
