Have credit-related question? We’re here to help. Here are the most common credit score FAQs.
What is a credit score?
A credit score is your credit history expressed as a number. The number will reflect the likelihood that you are a financially trustworthy person. Lenders use credit scores to determine who qualifies for a loan, at what interest rate, and what credit limits.
Why don’t I have a credit score?
There are many reasons you may not have a credit score. Things like not using your credit in more than 24 months, or you never used traditional credit accounts, and pay for things in cash.
If you have little to no credit history, you will probably not have a credit score available. You need to demonstrate your track record with credit over time.
What is a good credit score?
If you want to achieve a great credit score, you will need to demonstrate a strong history and track record of managing your credit wisely over a long period of time. One of the most important aspects is paying your debts on time and in full.
Other factors that play a role could be how much outstanding debt you have, or what types of credit you have.
What is the credit score range?
There are many credit scoring models out there, but the most popular one is FICO, which has a scale ranging between 300 and 850.
The score ranges:
- 800 and above: Exceptional
- 740 to 799: Very Good
- 670 to 739: Good
- 580 to 669: Fair
- 579 and below: Poor
How is a credit score calculated?
Your credit score is generated based on the information in your credit report, such as credit cards, loans, mortgages, rent and inquiries.
Here are some factors considered in credit scoring calculations.
- The number of accounts you have
- The types of accounts
- Your used credit vs. your available credit
- The length of your credit history
- Your payment history
Does having too many credit cards affect credit score?
Yes. Having too many credit cards with high balances or large amounts of credit available can negatively impact risk scores, depending on the overall credit history.
Do late payments affect credit score?
Paying your bills on time is the single most important contributor to your credit score. Being late on your payments indicates the potential future nonpayment of debt, which will be viewed negatively by lenders. Any late payments will remain on your credit report for up to seven years.
Does renting a home affect credit score?
Yes, because your rental payment history is now part of your standard credit report, and it may be incorporated into certain credit scores.
When reviewing your rental application, landlords typically pull your credit report. The hard inquiry that comes from a credit check can affect your credit score. Inquiries are 10% of your credit score. One inquiry typically won’t cause a significant drop in your credit score. However, if you make several applications in a short period of time, your credit score may take a noticeable hit.
But, this will allow many who previously didn’t have a credit history to become scorable for the first time and begin building and rebuilding credit through the responsible payment of rent.