If you’re shopping around for private student loans, you’ve probably encountered questions about your “credit score

If you’re shopping around for private student loans, you’ve probably encountered questions about your “credit score

” Your credit score is a three-digit number that summarizes information about your credit history, which is available in your credit report.

To better understand how your credit history and credit report are used to calculate your credit score, let’s first address the question: What does a credit score mean?

What is a credit score?

A credit score is a calculation that indicates the likelihood that you will repay a loan in full and on time. In other words, your credit score is a “grade” for your “creditworthiness.”

This can affect not just the amount a creditor is willing to lend you, but your interest rate on that amount, which affects the total cost of your loan. For example, lower credit scores tend to receive higher interest rates, which means you’ll pay more in interest charges over the life of your loan.

What’s a good credit score?

Many companies can generate credit scores. Some of the most commonly known scores are FICO scores. FICO stands for Fair Isaac Corporation, the creators of the score, which has a range of 300 to 850 (with 850 representing the best and highest credit score).

Lenders usually work with one of the three bureaus to obtain your credit score. A lower credit score suggests a greater risk that you will not fully repay your loan (or repay it on time), whereas a higher credit score suggests a stable financial situation and less risk.

Every lender will have their own set of criteria for assessing the level of risk they’re willing to tolerate when extending credit. For example, one lender might elect to issue loans only to individuals with a score higher than 700, whereas another lender might consider individuals with a score higher than 640.

What’s the average credit score for a typical college student or high school graduate?

According to Credit Karma, the average credit score for people between the ages of 18 and 24 is 630. The average credit score for people between the ages of 25 and 34 is slightly lower at 628. As of the latest Credit Karma reporting, the first age group to break a credit score of 630 is between the ages of 45 and 54, with an average credit score of 646.

How are credit scores calculated?

Your credit score is calculated using information in your credit report. This report includes your entire credit history – mortgages, car loans, student loans, credit cards – any type of credit that has ever been extended to you, and any payments related to that credit (missed, late, or on-time).

online payday MI

Overall, a good credit history paints a picture of stability. The longer you’ve been using credit responsibly, the better that is for your score. Likewise, an extended history of missed or late payments can hurt your credit score.

There are a number of components in your credit history that contribute to the calculation of your credit score. Not all of these components weigh equally, so it’s important to understand how each factor in.

Payment History – 35% of your credit score (highest of all components)*

One of the most important components of your credit report is your payment history. This shows which payments to current and former creditors you have paid on time and which (if any) you have not. These details can date back years.

Debt Utilization Ratio – 30% of your credit score*

Your debt utilization ratio shows how much credit has been extended to you at the time a credit report is run, and how much of that credit you are using. The more credit you have that you are not using, the better. Some experts advise sticking to no more than 10% credit utilization while others say 30% is good.

be
Author: be

Section 523(a)(8) is short for a compromise involving the Family statement plus the Senate amendment out-of academic loans

כתיבת תגובה

האימייל לא יוצג באתר.

סגור

תגובות אחרונות

    סגור סל הקניות שלי
    סגור מועדפים
    Recently Viewed Close
    סגור

    סגור
    Navigation
    קטגוריות
    דילוג לתוכן