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A 650 Credit Score Actually Isn't Excellent Enough
When you have lately obtained your report and discovered that you have a 650 credit score, you may be worried and perhaps even slightly confused. Why does it count what the score is? Which credit bureau should you believe? What aspects impact your result? Should you even be bothered? Why does it matter what the score is?
If a new lender looks at an application for credit card debt, credit score is one of the factors they will use to evaluate whether to lend the funds on the first hand. When they choose to grant the facility, your report will influence the credit limit and interest rate you get charged. The higher the score the lesser the interest rate you will pay and you may be given a higher borrowing facility. However it is not simply credit card applications that it affects.
When you go to renew your auto insurance or your home insurance, your insurer will also check out your credit score and may increase your premiums if he perceives you to be a bigger risk than an individual with a better score.
Which credit bureau should 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 because there is no one defined way to calculate this figure and partially because all three credit agencies use slightly different details to compile your credit report. You are best working on around the 3 scores. Anything you can do to enhance your rating will have a positive effect on all three bureaus.
What factors influence your result? Before you can consider raising it, you have to know what factors affect it. The score alone depends a lot of factors but the ones that seem to have the most influence are
1. Payment history - you should make sure that the reports filed are accurate as often mistakes are made. It is estimated that this alone accounts for up to thirty-five percent of your score so it is important it is accurate.
2. Amount you owe compared to the credit limits you have already got - if you are maxed out on your credit cards, your rating will certainly suffer. So try to get those balances down. It is advisable 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 number so you must do all you can.
3. Number of credit applications - the more applications for borrowing you submit the more your score will be badly affected. Don't submit an application for any new borrowing unless you really need it and be selective who you apply to. Pick the lender with whom you have the most possibility 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? The credit file has an impact on numerous areas of your life. You can enhance it if you follow 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 extra dollars to get rid of the debt once and for all.
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