A 650 Credit Score Actually Isn't Excellent Enough
If you have recently obtained your report and found that you have a 650 credit score, you may be troubled and perhaps even somewhat confused. Why does it count what the score is? Which credit bureau must you believe? What factors influence your result? Should you even be concerned? Why does it matter what the score is?
Once a new lender browses through an application for credit card debt, credit score is one of the criteria they will use to examine whether to lend the cash in the first place. If they decide to grant the facility, your report will influence the credit line and interest rate you get charged. The larger the score the smaller the rate of interest you will pay and you may be awarded a higher borrowing facility. But it is not just credit card applications that it affects.
When you come to renew your car insurance or your home insurance, your insurance provider will also see your credit score and may increase your premiums if he sees you to be a higher risk than someone with a higher score.
Which credit bureau should 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 because there is no one defined way to determine this figure and partially because all 3 credit agencies use slightly different information to compile your credit report. You are best working on an average of the three scores. Anything you can do to improve your rating will have a favorable effect on all three bureaus.
What factors affect your result? Before you can consider raising it, you need to know what factors affect it. The score itself is based on a lot of factors but the ones that seem to have the most influence are
1. Payment history - you have to be sure that the reports filed are accurate as often mistakes are made. It is approximated that this alone accounts for up to thirty-five percent of your score therefore 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 get those balances down. It is recommended 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 should do all you can.
3. Number of borrowing applications - the more applications for borrowing you submit the more your rating is going to be adversely affected. Don't sign up for any new borrowing except if you really need it and be selective who you apply to. Select the lender with whom you have the most possibility of success.
Should you even be concerned? Indeed, 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 improve it if you follow the proper advice. Steer clear of any "experts" who want 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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