Average Credit Scores

Average Credit Scores

An Average Credit Score – How Important Is It When Borrowing

People often ask…..What is considered “Good†Credit? Well, the answer is…. It depends! The variables in determining “good†or “bad†credit are the stipulations that lending institutions currently have in place at any giving time.

A good example of this is that a few years ago, a borrower with A Credit score of 580 could qualify for a 100% loan. (Which meant that most people considered “580†a bench mark of “good†credit). But in today’s market, lending institutions want borrowers to have at least a “680†score to approve loans. (Now “580†doesn’t look to hot….does it?)

Computing your score is a scientific process that Experian, Trans Union and Equifax use and each one has its own unique system. The scores ranges are between 375 and 900, with around the 600 mark being the average score. In order to find out what your score is, you need to request a free copy of your Credit Report. This will give you an idea of what creditors see when they do a Credit Check on you.

The Average Credit Score is the rating that the 3 major Credit Bureaus assign to your credit report. It is based on your borrowing and repayment habits and depends on how much money you owe and how many times you have applied for credit. If you have a low score, there are ways of improving it. In general, an average score tells creditors that you are a good risk for them to lend you money.

If you find that your average score is below 500, then you are in the lower part of the scoring range. It also means that you have to take steps toward Improving Credit. For example, if you plan to look for a loan for a new car within the next year, you should start now by making a diligent effort to pay all your bills on time. If you apply for a loan, even if you are accepted based on your earnings, every person that asks to view your credit, shows up on your credit report. This deters some creditors because they think you are a compulsive borrower.

The higher your scores, the better chance you have of being granted credit. This is why you should always know what your credit report says about you and what your average score is. The credit  range you fall in not only determines whether or not you get a loan, bit it also determines the interest rate you have to pay. When you understand what creditors are looking for, you can work towards improving scores. When your average score is good, you will save money in the interest rates charged on the loan.

An average Credit Score Is fine, although it is relative, and you can always do better.

Frank Purcell

Host- Expert Showcase    http://www.TheWealthBuildingExpert.com

About the Author

I am an Information Producer. I look to network with & PROMOTE other businesses/entrepreneurs. I work with them to market & brand themselves (FREE) to become #1 in their marketplace. Which creates more loyal and educated clients. Visit http://www.TheWealthBuildingExpert.com to learn techniques from National Experts, to implement for increased business profits.

If I have an average credit score of 500 and wish to increase it to 700+ how long would it take?

also what are some things I can do?

It really depends on why your score it 500. If you have things that are reported incorrectly then those can be fixed or deleted which will help increase if faster but you are probably looking at 6-12 months maybe longer. Here is a some info for you.

Credit Scoring Basics

What is A Credit Score?

A credit score is a number generated by a mathematical formula that is meant to predict credit worthiness. The most common of the credit score standards is the FICO score by Fair Isaac. The FICO score ranges from 350-850 and is intended as a predictor of whether or not you will be 90 days late on a loan obligation. Fair Isaac uses thousands of Credit Reports to calibrate the FICO scoring model and is very secretive of the exact formula.

Here is a percentage breakdown of a FICO score:

35% - Payment History
30% - Debt Ratio
15% - Length of Credit History
10% - Types Of Credit
10% - Number of Credit Inquiries

Most people are aware of the three Credit Reporting Agencies TransUnion, Equifax and Experian. The average difference in score between the highest and lowest of your three FICO scores is 60 points. This is the result of each of the credit bureaus having different items on their report. some correct, some incorrect and some that are not being reported in full compliance with credit law.

According to the Government Accountability Office, 80-90% of credit reports have serious errors on them, How can I get a free copy of My Credit report? By law, all consumers are entitled to a free copy of their credit report from each of the three credit bureaus once a year. Visit annualcreditreport.com to get yours for FREE. (This is for the credit report only and does not include the credit score.)

How long will the items get reported on my file?

Delinquencies (30–180 days): Can remain seven years from the date of the initial missed payment.

Collection accounts: Remain seven years from the date of the initial missed payment that led to the collection (the original delinquency date). When a collection account is paid in full, it will be marked "paid collection" on the credit report.

Charged-off accounts: Remain seven years from the date of the initial missed payment that led to the charge-off (the original delinquency date), even if payments are later made on the charged-off account.

Closed accounts: Closed accounts are accounts that are no longer available for further use. Closed accounts may or may not have a zero balance. Closed accounts with delinquencies remain seven years from the date they are reported closed, whether closed by the creditor or by the consumer, but the delinquency notation will be removed seven years after the delinquency occurred when pertaining to late payments. Positive closed accounts remain ten years from the closing date.

Lost Credit Card: If there are no delinquencies, Credit Cards that are reported lost will continue to be listed for two years from the date the card is reported lost. Delinquent payments that occurred before the card was lost are reported for seven years.

Bankruptcy: Chapters 7, 11, and 12 remain for ten years from the filing date. Chapter 13 remains seven years from the filing date. Accounts included in bankruptcy will remain seven years from the date they were reported as included in the bankruptcy.

Judgments: Remain seven years from the date the judgment is filed.

City, county, state, and federal tax liens: Unpaid tax liens remain fifteen years from the filing date. Paid tax liens remain seven years from the paid date of the lien.

Inquiries: Most inquiries listed on your credit report will remain for two years. All inquiries must remain for a minimum of one year from the date the inquiry was made. Some inquiries, such as employment or pre-approved offers of credit, will show only on a personal credit report pulled by you.

Is there anything that cannot be in My Credit Report?
Certain information cannot be in A Credit Report, including:

Medical information (unless you give your consent)
Notice of bankruptcy (Chapter 11) that is more than ten years old Debts (including delinquent child support payments) that are more than seven years old Age, marital status, or race (if the request is from a current or prospective employer

Average Credit Scores - Episode #60

 

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Average Credit Scores

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