The Range Of Credit Scores

Credit scores range from 400 to 900, with the average around 700. According to the model, as your score increases, your risk of default decreases.

Industry experience shows a direct correlation between low scores and high default rates. This means that you may have a hard time convincing a creditor to make you an affordable loan (or any loan at all) if your score is far below average.

But just as your credit history can vary from credit bureau to credit bureau, so can your credit scores. It is possible to have a high score with one credit bureau and a low credit score with another, just as you might have a clean credit history with one bureau and a muddied record with another.

Wide-ranging credit scores are rare, although some lenders admit to seeing borrowers with scores that vary by 100 points or more. To combat this, a lender usually uses the middle score, but that can be of little comfort if you have scores of 550, 570 and 700 and the interest rate for a borrower with a score of 570 is two points higher than the rate for a borrower who scores 700. Narrow ranges are more typical. For example, a person with good credit might have scores something like 685, 702 and 710.

Creditors are not required to tell you your credit score, nor does your credit report show your score. Your credit can determine what type of car you drive, what you can buy and even where you can live. It is important to maintain the best credit report possible.

Your thoughts on this subject? Your comments appreciated!

Content © Rich Brott, 2011

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