{"id":665,"date":"2018-06-07T15:51:33","date_gmt":"2018-06-07T20:51:33","guid":{"rendered":"http:\/\/www.realtyhop.com\/blog\/?p=665"},"modified":"2022-05-03T15:31:32","modified_gmt":"2022-05-03T19:31:32","slug":"credit-score-what-is-it-and-why-is-it-important","status":"publish","type":"post","link":"https:\/\/www.realtyhop.com\/blog\/credit-score-what-is-it-and-why-is-it-important\/","title":{"rendered":"Credit Score – What Is It and Why Is It Important?"},"content":{"rendered":"

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Most of the major decisions we have to make in life will end up being about our credit scores, from applying for credit cards to buying a new car. Our credit scores also play a big role when we apply for new jobs \u2013 the credit score is usually part of the background check report. If you have never had a credit score and never had the need \u2013 lucky you (while most of us are like, \u201chow is it possible?\u201d, some people, in fact, live their lives just fine with no credit score or credit history). But hey, if you are planning to buy a house, the fact that you don\u2019t have a good credit score will most certainly be a deal-breaker.<\/strong><\/p>\n

In case you are unfamiliar with the credit system in the U.S., a credit score is a statistical three-digit number that predicts how likely a consumer will repay his or her debts. It is, in general, very difficult for lenders to predict if a mortgage applicant would be able to make mortgage payments on time, and so, they rely on credit scores to tell them if a person is financially stable and trustworthy. If you are planning to buy a house, chances are that you will need to apply for a mortgage. It is, then, imperative that you have a good or even excellent credit score. Having a good credit score gives you more options when getting a mortgage, as more lenders will consider lending you money. A good credit score may also help you get a lower interest rate, which means less money putting in interest over the life of the loan.<\/p>\n

So, how does it work? To understand how your credit score is calculated, let us first talk about the system. The FICO (Fair Isaac Corporation) Score is by far the most commonly used credit-scoring system, and it ranges from 300 to 850. Below is a credit score scale chart that shows different credit score categories and their ranges.<\/p>\n

\n\n\n\n\n\n\n\n
Exceptional<\/td>\n800 and above<\/td>\n<\/tr>\n
Very Good<\/td>\n740 – 799<\/td>\n<\/tr>\n
Good<\/td>\n670 – 739<\/td>\n<\/tr>\n
Fair<\/td>\n580 – 669<\/td>\n<\/tr>\n
Poor<\/td>\n580 and below<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

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FICO, as well as other credit-scoring systems, look\u00a0at a few things in the credit report when calculating a person’s credit score:<\/p>\n

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