Your Credit Score
APPLYING FOR A LOAN
If you’ll be applying for a loan or an apartment, the first thing to do is check your credit score so you can plan accordingly. If it’s a good score, you’ll have more confidence going into the application process. If your score needs improvement, you can take steps to raise it before you apply.
THERE ARE SEVERAL WAYS TO CHECK YOUR CREDIT
You can visit the three major credit bureaus online that most businesses refer to when evaluating your creditworthiness, Equifax, Experian, and TransUnion, but there are easier ways to check your credit score. There are quite a few websites that will show you your credit score for free and provide you a credit report that details how your score was derived. They will also monitor your score and update you, often on a weekly basis. Knowing the components of your credit report that negatively affect your score will give some starting points to improve it before you apply to rent an apartment.
If you have a credit card, your credit card provider most likely offers you the ability to check your credit score right through their website or phone app. Usually, they will show you your current credit score as well as provide detail what components of your credit history are affecting it positively (e.g., on-time payments) or negatively (e.g., recent filing for bankruptcy). Some providers also offer tools that can allow you to see how your score might change if you made adjustments to these components (e.g., raising your credit limit, taking out an auto loan, etc.). Among the prominent credit card companies that offer credit score reporting are American Express, Capital One, Citi, and Discover Card. Reviewing your credit score regularly not only helps you understand your credit profile, but it can also safeguard you against identity and credit theft.
WHAT IS GOOD CREDIT?
Credit scores are also referred to as FICO scores, which is an acronym for Fair Isaac Corporation, the company that developed the current credit scoring models used to predict a borrower’s ability to repay a loan on a timely basis. They can range from 300 to 850, and as you might imagine, the higher your score, the better your credit rating. In general, these score ranges suggest different creditworthiness:
Very Good (740-799)
You can obtain loans with a ‘Fair’ FICO score, which is below the national average, but most likely, any loan you obtain will come with a higher interest rate than any of the better scores, the length of the loan will be shorter, and the amount will be limited. A ‘Good’ score means you’re at the national credit average. Lenders will be more comfortable granting the loan and you’ll get more favorable terms. A ‘Very Good’ score tells lenders you’re reliable and will make payments on time. You’ll be eligible for credit cards with more competitive rates and better terms, and apartment owners will be more likely to rent to you. With an ‘Exceptional’ score, pretty much all doors for borrowing fpr credit cards, auto loans, mortgages, etc. are open with generous loan amounts and the lowest interest rates.