Credit Score (DOC)

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					Credit Score
These days, it doesn't take much to hear a lot of talk about credit scores. Ads blaring from all
directions tell you how to get and keep good credit. Newspaper and television stories tell about
victims of bad credit. The trouble is, many people don't know much or anything about what a
credit score is or if they do, what it means. You are in luck.

Simply put, a credit score is a measure used by banks, stores and other financially-related
organizations to determine a debtor's ability to repay a loan. With the economy being what it is
today, many people are relying heavily on credit to get by. This makes knowledge about your
credit more important than ever before. In fact, without a decent score, it is very difficult to
obtain a loan or make a credit purchase.

Prior to taking out a loan or getting involved in any transaction that involves credit, you should
know your credit score. Further, you should understand just what that number means. After all,
that number is critical in determining whether you will receive an approval on your loan or
purchase or not.

Your credit score is a three-digit number that is arrived at by the three major credit reporting
agencies. This number shows creditors or potential creditors some personal information about
you, your financial history, and your record of how well you were able to manage your finances
in the past. Naturally, creditors can assume from this how likely you are to handle your credit in
the future.

Most institutions use a scale that ranges from 350 to 850, bad to good, respectively. With a score
below 600, the chances of getting a loan or establishing credit are not good. With a score of 600
to 640, you might be able to get a loan or make a credit purchase, but it will be difficult and
lenders will probably charge you a high rate of interest to protect themselves.

Scores between 641 and 680 are considered okay. They aren't the best, but it could be worse. A
debtor with this store might get a loan but he won't be considered the most desirable. Scores
between 681 and 720 are considered good. A person with a credit score in this range is
considered a good risk for paying back a loan.

A score higher than 720 is very desirable. These debtors are sought after by banks and other
institutions with the best loan rates and other benefits.

If you found reading this to be depressing, fear not. These numbers are by no means permanent.
On the contrary, many have ruined their credit scores with job losses and other predicaments, but
with hard work have turned things around. You can too.

It is important to constantly monitor your credit score. This is especially important prior to
attempting to take a loan or make a large purchase. This will ensure that there are no surprises
when you apply for that credit. In the meantime, you can check your CREDIT SCORE
periodically free of charge, to ensure that the score is correct and that you have not been a victim
of identity theft.

I am a finance enthusiast and I generally write about the latest trends in the industry.

				
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posted:3/9/2011
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Description: Simply put, a credit score is a measure used by banks, stores and other financially-related organizations to determine a debtor's ability to repay a loan