What is a Credit Score?
It’s one number that can be the key to your financial well-being or one that can be a serious financial roadblock.
Your credit score, in one word, conveys your creditworthiness. Created using credit report information, your three-digit credit score has the potential to impact all your expenses — big and small.
Here’s an in-depth look at what is a credit score and how it can affect your life.
What A Credit Score Is: The Basics To Know
A credit score provides a reliable snapshot of a consumer’s credit habits. The number ranges from 300 to 850, with 300 being the worst. Scores lower than 580 are typically deemed poor/, meaning your score is far below the average for consumers in America.
Exceptional scores are considered well above average and usually between 800 and 850.
The higher the credit score, the more attractive you look to credit lenders and others, everyone from mortgage and insurance providers to landlords and car loan companies.
The most common credit score model by far that’s used by financial bodies is the FICO Score, created by the Fair Isaac Corporation in the 1980s, but there are a few other creditor score systems.
There are Different Kinds of FICO Scores
Answering the question, “what is a credit score?” gets a little complicated since there are multiple types of FICO Scores. It’s not uncommon to have more than one FICO Score attributed to your name and credit.
FICO Scores are used by about 90% of lenders, but the FICO also offers several versions of its scoring system to accommodate different lending transactions.
For example, auto loan lenders may utilize one type of FICO Score while credit card companies may use another.
What’s Behind Your Number
There is a lot that goes into creating your three-digit score. Credit bureaus such as TransUnion, Equifax, and Experian generate the scores by examining your credit report, which is a document that basically showcases your entire financial life.
A credit report includes your personal information, outlines your credit accounts currently active (credit lines, cards, and loans), any history of bankruptcy or liens, and the number of credit inquiries tied to your name.
Five big factors go into how your FICO Score is calculated:
- 35%: Payment history. Regular on-time payments help your credit score, while missed or late payments can lower it.
- 30%: Credit utilization. The amount within your available credit that you are currently using. Most financial experts recommend sticking to using at the most 30% of your credit limits at any given.
- 15%: Credit age. How long you’ve been using credit. If you’re using a credit card for the first time ever, your score may be temporarily lower than someone with more experience using credit.
- 10%: Credit mix. The different types of credit that someone is using, for example, if they’re using not just installment loans but also credit cards.
- 10%: Credit Inquiries. When your credit report registers a new inquiry when your credit is checked for any reason.
What is a Credit Score's Impact on My Daily Life?
Credit scores can dictate everything from the type of loans you qualify for, the terms and conditions of credit cards, your interest rates, and even whether you can rent an apartment, buy a home, or land a certain job.
The good news: credit scores are never permanent. By committing to good financial practices such as on-time credit card payments and not going over limits, you’ll be able to see your score rise over time.
Credit Scores and Installment Loans
Even when you’re coping with a sudden financial emergency, many lenders may automatically disqualify you from receiving a loan, especially an installment loan.
We think differently. At Utah Title Loans, Inc., we encourage those with all forms of credit to pursue an installment loan. In as little as 30 minutes you may qualify for a loan of up to $1,500 — and get the money you need that same day or the next business day.
Head to our homepage to start the loan process. Fill out the short loan inquiry form and soon after it is submitted one of our loan representatives will give you a quick call to discuss the required items (an ID, proof of income, a checking account statement that is in your name) for a loan and guide you through the rest of the easy process.
We have locations all over Utah, making it easy to find a Utah Title Loans, Inc. store near you.
Get Started Today
So, what is a credit score? It’s the key to your outstanding financial health. Maintain a solid score by taking care of a pressing financial expense quickly and easily with help from a loan. Start online, give us a call, or visit us today.
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.