Credit Rating Scores - What You Should Know

When you apply for a boat or auto loan, credit card or department store card, the lender may request a  copy of your credit report and scores to evaluate your credit worthiness. Having great credit rating scores may increase your chances of obtaining that home loan you've always wanted.

What are Credit Rating Scores?

Credit rating scores are calcualted based on the information contained in a consumer's credit bureau report. Lenders use the credit scores to judge the risk of extending credit to a consumer. A credit score can range from 0 to 800, however the most common range is 500 to 800.  Many consumers have a credit rating score between 750 to 799, while a smaller percentage have credit scores exceeding 800. 

The higher credit rating scores consumers have, the better their chances are of getting a loan or credit card application approved. Consumers with high credit scores may also be eligible for low interest rate loans with relaxed payment terms, while a consumer with a low credit score may only be able to acquire high interest rate loans with strict terms.

Credit rating scores less than 500 may indicate that the consumer may have a lot of debt and may be consistently delinquent on payments. Consumers with a credit score this low are often denied credit.

Consumers with a credit score between 500 – 579 may still have a lot of debt. These consumers may experience a hard time getting approved for credit. If they are approved for credit, the interest rates are usually high and the terms are generally very strict.

Credit Rating Scores between 580-619. Consumers with credit scores in this range may have difficulty getting credit approval. Consumers in this range or below are considered subprime.

A credit score between 620 – 679 is an improvement. Consumers with credit rating scores in this range have a better chance of getting approved for a credit card; however, there may be some restrictions and interest rates may be high.

A credit score between 680-719. It's not perfect, but many consumers in this range don't have any problems qualifying for most loans.

A credit score between 720-800. Consumers in this range can usually get approval for loans at low interest rates.

How to improve Credit Rating Scores

There are a few ways to clean up your credit and improve your credit rating scores. Build up a solid payment history by paying your bills on time. Don't charge the limit on your credit cards. Don't cancel credit cards, because the account history may benefit your scores. Don't apply for too many credit cards or loans in a short period of time, because too many inquiries on your credit report can lower credit rating scores.

For more information about debt related issues, visit the NCO Financial Systems, Inc.,(“NCO”) consumer help unit website. Every page on the NCO Financial Systems, Inc. website has contact information available to the consumer.

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