Does Your Credit Score Start At Zero?
May 7th, 2012 | Author: Stephanie
Many people do not understand the basics of a credit score, which can make if difficult for them to understand the difference between a good credit score and a bad one. Credit scores are important, as they are what tell lenders, at a glance, whether or not they should lend money to you.
If you wish to purchase a car, a home, get a credit card, or obtain some other line of credit, your credit score is going to be the first, and most important factor they look at when determining whether to lend to you or not. Most of us understand that a low credit score is not a good thing, and will make it more difficult to obtain a loan or line of credit, but most people also don’t understand what the range of credit scores is.
A FICO score, which is a score derived from your credit scores issued by the three major credit scoring agencies, can range from between 300 to 850. There is no such thing a credit score of zero, but in financial terms, a credit score of 300 is, for all intents and purposes, a score of zero,
while a score of 850 would be perfect. It is incredibly rare for anyone to have either of these two score extremes, but this is the range in which credit scores are given.
Those with very poor credit, even horrible credit, are likely to have credit scores in the low 500s. This should give some indication as to how difficult it would be to have a credit score of zero. Even those with excellent credit, with no negative judgments, lots of credit in good standing, is not likely to have a credit score of much above 800, even though these are amongst the most credit worthy people in the nation.
One’s credit score is vitally important and a low credit score can really make it difficult for one to obtain the credit they need to get a car or to live the American Dream of owning a home. It is important that you know your credit score and understand what it means. It is also imperative that you know your credit history and what is on your credit report, otherwise, you might be in for a surprise in the form of being denied for a line of credit, without even knowing that your credit report had negative marks on it.