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A 650 Credit Score Simply Isn't Nice Enough
If you have just received your report and discovered that you have a 650 credit score, you may be troubled and probably even somewhat confused. Why does it matter 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?
Once a new lender browses through an application for credit card debt, credit score is among the factors they will use to assess whether to lend the funds in the first place. If they plan to grant the facility, your report will affect the credit line and interest rate you get charged. The larger the score the lower the interest rate you will pay and you may be awarded a higher borrowing facility. But it is not only credit card applications that it influences.
When you go to renew your car insurance or your home insurance, your insurance provider will also look at your credit score and may increase your premiums if he perceives you to be a higher risk than someone with a higher score.
Which credit bureau will you believe? Your Experian credit score will be somewhat different than the Transunion credit score which again may vary from the Equifax one. This is partly since there is no one defined way to determine this figure and partly because all three credit agencies use slightly different information 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 favorable effect on all three bureaus.
What factors influence your result? Before you can think about raising it, you need to know 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 have to be sure that the reports filed are precise as often mistakes are made. It is estimated that this alone accounts for up to 35% of your score so it is important it is correct.
2. Amount you owe compared to the credit limits you already 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 below 35% of the available credit which is easier said than done! When it comes to credit score 650 is not a high enough figure so you have to do all you can.
3. Number of credit applications - the more applications for borrowing you submit the more your rating is going to be adversely affected. Never sign up for any new borrowing except if you really need it and be picky who you apply to. Select the lender with whom you have the most chance of success.
Should you even be concerned? Yes, 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 adhere to the proper advice. Steer clear of any "experts" who like to charge you fees for fixing your report. You can easily do yourself and you need all those extra dollars to eliminate the debt once and for all.
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