subject: Credit-Scores: What Do They Mean [print this page] Credit-Scores: What Do They Mean Credit-Scores: What Do They Mean
The first step in determining how good or bad your credit is, of course, is to find out your credit score. You can do this on-line for about a dollar. Once you get your credit score that is great, you have taken your first step, but if you don't know exactly what your credit score means, it won't do you much good in knowing exactly how you will look to the lenders (whom you may want to get a loan from).
Basically, a score that is above 800 is considered excellent credit, 750-800 is very good, 700-750 is good, 650-700 is fair (the average credit score is around 678), 600-650 is bad, and anything under 600 is very bad. Although you can get loans with bad credit scores, you will be paying very high interest rates since lenders use the extra money gained from high interest as protection against the fear of not being paid the rest of the money owed to them. Since a bad credit score reflects irresponsibility with payments, having no credit at all is better than bad credit since with no credit, at least the lenders do not have proof that you have problems using credit.
It is always a good idea to check your credit scores often to protect yourself against ongoing credit card fraud and ongoing mistakes that the credit card company can often times make. If your credit score all of a sudden drops, you will know something is going on and hopefully you will be able to fix it before it turns into a disaster. It would be unfortunate to try to apply for a loan and then find out that somehow your credit score had been damaged without having any time to try and fix it before you needed the loan.
