Credit Score Scale & Forex Trading: A Guide
Have you ever heard somebody referring to a ‘credit score scale’? Maybe you have wondered what this mysterious term means and why it is important to consider when borrowing money. In this article, we will explain what a credit score scale is and how it affects your ability to take out a loan.
Understanding Credit Score Scale
When it comes to loan applications, most lenders will check your credit score and credit history to decide whether to approve or reject your loan application. Credit score scale is a measure of your creditworthiness, it’s an indication of how likely you are to pay back a loan. Your credit score can range from 300 (very poor) to 850 (excellent). FICO’s credit score ranges from 300 to 850, and VantageScore ranges from 501 to 990. In general, a credit score of 670 and above is what lenders are typically looking for to approve a loan. The higher the score, the better.
Comparing FICO and VantageScore Credit Scoring Models
Comparing FICO and VantageScore credit scoring models, FICO labels a score below 499 as “poor” while VantageScore collapses it into the “very poor” range. But, both range from 300 to 850. Understanding how lenders consider your credit score is beneficial in anticipation of any potential loan application. It’s important to know how lenders class different credit scores since it can be quite different between the two scoring systems.
How Credit Scores Are Calculated
Your credit score is created from five factors – payment history, amount owed, length of credit history, new credit, and credit mix. Your payment history accounts for 35% of your credit score; how often you pay your bills on time. Amount owed contribute to 30%; what you owe and credit utilization. The length of credit history accounts for 15%; how long you’ve had credit accounts with lenders. New credit (10%) and credit mix (10%) are the other two factors that make up your credit score.
ScoreSense is a great way to stay on top of your credit score. It provides you with your credit scores and credit reports. With ScoreSense, you have access to 28 FICO® scores and scores derived from the VantageScore 3.0 model. With this service, you’ll be able to make sure that your scores accurately reflect your credit history.
Experian & Accuracy of Credit Scores
Experian is one of the top three credit reporting agencies in the U.S. Your credit score is calculated according to Experian’s data which is pulled from information in your credit reports, such as your credit history and payment patterns. A good credit score with Experian would be 670 or above, and anything over 740 is considered excellent. But it’s important to know that there are several different scoring models which determine your credit score and some may differ, depending on the creditor or lender.
The Credit.com team provides a detailed and clear explanation of how credit scores work and how it’s calculated. This can give you a better understanding of the world of credit and also how to build and maintain a good credit score. Ultimately, with proper guidance, you’ll be able to obtain a great credit score, which may open many doors to you in the future.