Credit: Know the Score

A good credit history is more important than ever. Solid credit keeps down the cost of consumer financing, and it can be the deciding factor in whether an auto or home loan application is approved.

In today’s fast-paced, high-tech age, your credit history will be reviewed more often by artificial intelligence than human intelligence. This computerization has made the loan process much more efficient. That’s a good thing. But computers take all the subjectivity out of credit evaluation, and that means you have to take ownership of your own credit standing to make sure you’re not blindsided by any stain on your record.

It is important that everyone know his or her credit score. Everyone is entitled to one free credit report a year. Various companies, including Experian Consumer Relations (888-397-3742), can show you your credit profile. Fairly frequently, erroneous information appears on a credit report. This can take a few months to correct, which might mean the difference between being able to purchase your dream home or not.

Credit scores usually range between 400 on the low side to 800 on the high side. On rare occasions these ranges can be exceeded. Sometimes a score cannot be obtained for factors like lack of credit history or too few lines of credit.

If you know your score, then you can see what the creditors see and have the ability to get a jump-start. Here is a quick breakdown of what a score means to a creditor:

720 and over Wonderful, you are at the top. Best rates and terms.
700 – 719 Excellent score. You are a very desirable borrower.
680 – 699 Good credit. You should be in strong shape to buy.
660 – 679 Okay credit. Don’t look for other exceptions.
640 – 659 Borderline. Okay if everything else is strong.
620 – 639 Weak. The rest or your file must be perfect.
600 – 619 Difficult. Needs some work or a special program.
Below 600 Trouble. Try to fix up your credit.