Your credit score and how it’s determined

A credit score is numerical rating used by lenders in the loan approval decision process. Your coaches explain how these scores are determined.

MichaelLenders always want to know the credit history of people who ask them for credit cards and loans. To find out, they turn to credit bureaus. The three largest credit bureaus in the United States are Equifax, Experian, and TransUnion.

LuisCredit bureaus keep track of everybody’s credit history information — things like how many credit cards you have and how much you owe; whether you pay your bills on time; where you work and how long you’ve worked there.

MichaelIn addition to your credit history, almost all lenders look at your credit score. This is a number that indicates how reliable you are at paying back your debts. A computer program analyzes your entire credit history and generates a single number or score, usually ranging from 300 to 850. This score helps lenders decide if you’re a good credit risk or not. The higher the score, the lower the risk.

In a very general way, here’s how credit scores might be grouped:

  • 760+ is excellent credit
  • 700-759 is very good
  • 600-699 is good
  • Below 600 is poor credit

LuisAnd remember: the higher your credit score, the better the interest rate lenders are likely to offer you — which could mean more money in your pocket!

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