What is a Credit Score?

July 2nd, 2018 by

credit score on modern laptop desk
Ask people for some important numbers in their life and they might tell you anything from lottery picks to date of birth and phone numbers to dress size. What they might not think about is their credit score — and that’s one number that affects everything from mortgage and rental applications to used car financing.

What is a Credit Score?

Credit scores are three-digit numbers that tell banks and other lenders how likely you are to pay back debt. The higher the number, the more they’ll trust you.

That number is put together by one of three main credit bureaus: Equifax, Experian, and TransUnion. Your lender may ask for a score from any bureau — while they can differ a little, each one will use a common scoring model, usually VantageScore or FICO.

Scores are based on factors such as how often you miss payments, how much debt you have, and how many of your accounts are in good standing.

What is a Good Credit Score?

Scores generally range between 300 and 850. Anything above 700 is usually considered good; above 800 is usually rated excellent. Of course, it depends a little on how the score is tabulated:

  • FICO: Good scores run between 670 and 739 on a 300-850 range.
  • VantageScore: Good credit starts at 700. The average VantageScore in 2017 was 675.
Credit score concept image, digital foreground

How Can You Improve Your Credit Score?

Raising your credit score can help you secure more competitive loan or financing packages in the future. It never happens overnight, but here are just a few things you can do to put your best financial foot forwards:

  • Use 30% or less of the available credit on your cards.
  • Pay off credit cards fully when and where you can.
  • Pay your bills on time.
  • Check your credit report for any errors.
  • Take a short-term loan and make your monthly payments on time.

Visit CarHop for Buy Here Pay Here Financing

If you need a car loan with no credit history, CarHop could be the answer. We provide access to Buy Here Pay Here financing, so we know all about shopping for used cars. To find out more or take a look at what’s available, visit your local CarHop today.

Posted in Credit