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A 650 Credit Score Actually Isn't Good Enough
When you have just received your report and discovered that you have a 650 credit score, you may be worried and perhaps even slightly confused. Why does it matter what the score is? Which credit bureau should you believe? What factors impact your result? Should you even be worried? Why does it count what the score is?
If a new lender looks at an application for credit card debt, credit score is one of the factors they will use to assess whether to lend the money in the first place. When they plan to grant the facility, your report will affect the credit limit and interest rate you get charged. The higher the score the lower the interest rate you will pay and you may be granted a higher borrowing facility. However it is not simply credit card applications that it influences.
When you go to renew your auto insurance or your home insurance, your insurer will also look at your credit score and may increase your premiums if he perceives you to be a greater risk than an individual with a better score.
Which credit bureau will you believe? Your Experian credit score will be a little bit different than the Transunion credit score which again will differ from the Equifax one. This is partly because there is no one defined way to calculate this figure and partly because all three credit agencies use slightly different info to compile your credit report. You are best working on around the 3 scores. Whatever you can do to raise your rating will have a positive effect on all three bureaus.
What factors influence your result? Before you can think about raising it, you need to know what factors affect it. The score alone depends a lot of factors but those that seem to have the most influence are
1. Payment history - you should make sure that the reports filed are accurate as often mistakes are made. It is estimated that this alone accounts for up to 35% of your score so it is important it is correct.
2. Amount you owe compared to the credit limits you already possess - if you are maxed out on your credit cards, your rating will certainly suffer. So try to bring those balances down. It is advised that you keep them to less than 35% of the available credit which is easier said than done! When it comes to credit score 650 is not a high enough number so you have to do all you can.
3. Number of credit applications - the more applications for borrowing you submit the more your rating will be badly affected. Never submit an application for any new borrowing unless you really need it and be selective who you apply to. Pick the lender with whom you have the most chance of success.
Should you even be concerned? Of course, yes and yes. Now you know the answer to the question is 650 a good credit score? Your credit file has an impact on numerous areas of your life. You can make it better if you adhere to the proper advice. Steer clear of any "experts" who like to charge you fees for fixing your report. It is easy to do yourself and you need all those extra dollars to get rid of the debt once and for all.
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