What Should My Credit Score Be?

If you are not one to check not only your credit score, but your credit report in general, now is the time to start.  Credit is the most important factor for a lender to decide our worthiness to get loan approval, whether it is for an auto loan or a mortgage purchase or refinance.  It is surprising how many family and friends that I hear do not know where they stand with their credit, or even just assume they have great credit.

A way to start would be to pull a Free Copy of your Credit Report.  You are entitled to a free copy of your credit report once a year from the three major bureaus: Equifax, TransUnion, or Experian.  Although pulling a free copy of your credit report will not give you a credit score, you can purchase one for an additional fee of usually under $10, or if you currently have a credit card, you can find your credit score on the monthly statement, whether you receive paper copies in the mail, or have an online account, you can click to see your score when logged in, as most credit card companies are providing an updated score each month.  When you view a copy of your credit report, double check to make sure everything is accurate, as far as the number of accounts open, addresses, and balances.  Keep in mind that reports are usually a month behind, so if you have charged or made a large payment or even open or closed an account it will not show up for an additional month or two.

Now what about the score?  Credit scores range from 301 the lowest to 850 the highest, with ranges falling in between, as “Poor” to “Excellent”.  “Excellent” scores would be those that are above 750, and thus getting the best possible rates available, and getting less favorable as you go lower in score, while those at the bottom cannot be trusted borrowers and would be declined.  “Good” are those between 700-749, “Fair” 650-699, “Poor” 600-649, and “Bad” anything below 600.  In order to make sure you get the most favorable rates and no trouble getting approval for a loan, you would need to make sure you get at least in the higher end of the “Good” range and above. Your credit score might come in handy if you ever needed liquidity and wanted approval for car title loans for quick cash. Your credit score affects just about every part of your financial life.

If you find your scores are low, you will need to make sure you continue to pay bills on time, balances are paid down to free up more available credit, and you avoid continuous new credit lines.  With patience and discipline, scores will rise.

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