Your credit score isn’t just a three-digit number. It’s not an identification number. And it is certainly important. In the past, those with poor credit scores have been denied credit card approvals and home loans, which negatively affected the future dreams and goals of those with poor credit scores.
What determines my credit score?
Five different categories of your credit report are taken into consideration for a credit score. Statistics about payment history, amounts owed, length of credit history, types of credit used, and pursuit of new credit are computed using a special mathematical algorithm. As far as impact goes, about 35% of your credit score is a result based on your payment history. Approximately 30% can be attributed to amounts owed, with the length of your credit history determining 15% of your final score. The remaining 20% is split between types of credit used and your pursuit of new credit.
The resulting number is your personalized credit score. The number produced is designed to predict risk: the likelihood that you will become seriously delinquent on your payments and credit obligations within 24 months of scoring.
What does my score mean?
A score of 770 usually marks the low end of “excellent” credit category. “Good” scores usually range from 700 to 769, and providers of premium credit cards may not approve cardholders with a score below 700. A score below 600 is widely considered to be poor, while those that fall in the 600 to 700 range are generally considered to be fair. Although most bad credit score bearers fear for their financial future, with enough expert planning and persistence, a bad credit score can be improved upon. One such way to do this is to apply for and carefully use a secured credit card.
For those with bad credit scores, an entire section of our website is dedicated to finding you the perfect credit card for your situation. Secure credit cards are great ways to improve upon credit scores, while being limited to lower-than-average credit limits. eCreditCards is dedicated to educating you on all there is to know about financial planning, credit scores and credit cards, so you can make the most informed decisions possible. If you do not know your credit score, we urge you to check out our free credit score estimator.