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A 650 Credit Score Actually Isn't Nice Enough
If you have just received your report and found that you have a 650 credit score, you may be worried and perhaps even a bit confused. Why does it count what the score is? Which credit bureau should you believe? What factors influence your result? Should you even be worried? Why does it count what the score is?
When a new lender looks at an application for credit card debt, credit score is one of the criteria they will use to examine whether to lend the money in the first place. If they plan to grant the facility, your report will affect the credit limit and interest rate you get charged. The greater the score the smaller the interest rate you will pay and you may be awarded a higher borrowing facility. But it is not simply credit card applications that it influences.
When you come to renew your auto insurance or your home insurance, your insurance company will also see your credit score and may increase your premiums if he perceives you to be a higher risk than someone with a better score.
Which credit bureau will you believe? Your Experian credit score will be slightly different than the Transunion credit score which again will differ from the Equifax one. This is partly because there is no one defined way to compute this figure and partially because all three credit agencies use slightly different information to compile your credit report. You are best working on an average of the 3 scores. Whatever you can do to increase your rating will have a positive effect on all three bureaus.
What factors affect your result? Before you can consider raising it, you need to know what factors affect it. The score itself depends a lot of factors but those that seem to have the most influence are
1. Payment history - you need to make sure that the reports filed are accurate as often mistakes are made. It is approximated that this alone accounts for up to thirty-five percent of your score so it is important it is correct.
2. Amount you owe compared to the credit limits you currently have - if you are maxed out on your credit cards, your rating will certainly suffer. So try to bring those balances down. It is suggested that you keep them to less than 35% of the available credit which is easier said than done! When it comes to credit score 650 is not a high enough quantity so you should do all you can.
3. Number of credit applications - the more applications for borrowing you submit the more your rating is going to be badly affected. Do not apply for any new borrowing unless you really need it and be selective who you apply to. Decide on the lender with whom you have the most possibility of success.
Should you even be concerned? Of course, yes and yes. Now you know the answer to the question is 650 a good credit score? Your credit file has an impact on various areas of your life. You can make it better if you stick to the proper advice. Steer clear of any "experts" who want to charge you fees for fixing your report. It is easy to do yourself and you need all those extra dollars to remove the debt once and for all.
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