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A 650 Credit Score Actually Isn't Excellent Enough
When you have just obtained your report and discovered that you have a 650 credit score, you may be worried and maybe even a bit confused. Why does it matter what the score is? Which credit bureau should you believe? What factors impact your result? Should you even be worried? Why does it matter what the score is?
If a new lender looks at an application for credit card debt, credit score is just one of the criteria they will use to assess whether to lend the funds in the first place. When they plan to grant the facility, your report will influence the credit limit and rate of interest you get charged. The greater the score the lower the interest rate you will pay and you may be awarded 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 house insurance, your insurance company will also look at your credit score and may increase your premiums if he perceives you to be a higher 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 as there is no one defined way to compute this figure and partly because all three credit agencies use slightly different information 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 aspects affect your result? Before you can think about raising it, you need 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 correct as often mistakes are made. It is approximated 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 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 simpler to say than do! When it comes to credit score 650 is not a high enough quantity so you have to do all you can.
3. Number of credit applications - the more applications for borrowing you submit the more your rating will be badly affected. Do not submit an application for any new borrowing unless you really need it and be choosy who you apply to. Decide on 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 numerous areas of your life. You can make it better if you stick 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 remove the debt once and for all.
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