Credit Ratings Explained
When applying for credit of almost any type, most companies will
check your credit rating. Your credit rating is an evaluation of your
ability to pay your debts. It is also a record of how well you have paid
your debts in the past. If you have a low credit rating, then you can
expect to pay higher interest rates on your loans. Some lenders will
deny you altogether if your credit score is not high enough.
At the present time, there are around 2000 credit bureaus in the USA.
Even though that can be a scary thought if you are trying to apply for a
loan, keep in mind there are only 3 major credit reporting bureaus.
These 3 credit bureaus are the only ones you need to be concerned with.
The first credit reporting bureau is Equifax. The second major credit
reporting bureau is TransUnion. The third and final company is Experian.
You can find more information about all 3 bureaus by visiting their
respective websites..
Equifax - http://www.equifax.com
TransUnion -
http://www.transunion.com
Experian - http://www.experian.com
Generally speaking, if you are trying to borrow money from a large
corporation, they will probably use all three credit reporting bureaus.
If you are dealing with a smaller company, many times they will only use
one of the companies. When you are attempting to repair your credit, it
is highly recommended that you try to restore your credit report at all
3 main bureaus.
Your credit rating is very important to your financial well being. Your
official credit rating is usually referred to as your FICO score. The
higher your FICO score, the easier it will be for you to qualify for a
loan. Various banks and institutions have different specific criteria
for granting loans to their customers. However, they all factor in your
FICO score very heavy when making their final decision. Generally
speaking, if your FICO score is between 300 - 500, you will likely not
be approved for the loan. If you are approved, you will pay a
substantially higher interest rate. If your score is around 600 and you
have a stable work history and enough income, then most banks will grant
you a loan. If your FICO score is 700 or greater, then you will almost
always qualify, as long as there are no other disqualifying factors. |
