If you have recently received your report and discovered that you have a 650 credit score, you may be worried and maybe even slightly confused. Why does it count what the score is? Which credit bureau must you believe? What aspects influence your result? Should you even be concerned? Why does it count what the score is?
If a new lender looks at an application for credit card debt, credit score is just one of the factors they will use to examine whether to lend the cash on the first hand. If they decide to grant the facility, your report will affect the credit limit and rate of interest you get charged. The higher the score the smaller the rate of interest you will pay and you may be granted a higher borrowing facility. But it is not just credit card applications that it influences.
When you go to renew your auto insurance or your house insurance, your insurer will also see your credit score and may increase your premiums if he sees you to be a greater risk than someone with a higher score.
Which credit bureau will you believe? Your Experian credit score will be a little bit different than the Transunion credit score which again will differ from the Equifax one. This is partly as there is no one defined way to calculate this figure and partially because all 3 credit agencies use slightly different info to compile your credit report. You are best working on an average of the three scores. Whatever you can do to raise your rating will have a positive effect on all three bureaus.
What aspects influence your result? Before you can consider raising it, you need to understand what factors affect it. The score itself is based on a lot of factors but those that seem to have the most influence are
1. Payment history - you should make sure that the reports filed are correct as often mistakes are made. It is estimated that this alone accounts for up to thirty-five percent of your score therefore it is important it is accurate.
2. Amount you owe compared to the credit limits you currently have - if you are maxed out on your credit cards, your rating will suffer. So try to bring those balances down. It is advised that you keep them to less than 35% of the available credit which is simpler to say than do! When it comes to credit score 650 is not a high enough number so you should do all you can.
3. Number of borrowing applications - the more applications for borrowing you submit the more your score is going to be adversely affected. Never submit an application for any new borrowing unless you really need it and be choosy who you apply to. Pick the lender with whom you have the most possibility of success.
Should you even be concerned? Indeed, yes and yes. Now you know the answer to the question is 650 a good credit score? The credit file has an impact on various areas of your life. You can improve it if you adhere to the proper advice. Steer clear of any "experts" who like to charge you fees for fixing your report. It is easy to do yourself and you need all those additional dollars to get rid of the debt once and for all.
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