What is a credit
bureau?
Lenders evaluate your credit
worthiness when you are applying for credit utilizing what is known
as a credit bureau. Essentially, a credit bureau is a file that
provides a snapshot of one's credit standing, listing both past and
outstanding financial obligations. This information is arranged in a
manner that conveys to a lender how a credit candidate has met his
or her financial obligations in the past and what obligations remain
in the future. Lenders such as automotive, mortgage, and credit card
companies use this information as a decision tool when making
lending decisions. Obviously, those individuals who have met past
obligations in a timely manner and that have a proven track record
of repaying debts stand a better chance of being extended credit.
Is there more than one credit
bureau?
Several major credit bureau services
exist and are extensively used throughout the United States, but
each service basically works in the same fashion and coveys the same
information.
What does my credit score mean?
Often a credit bureau has a score
associated with it which is used by a lender to quickly categorize
various credit candidates in to different classifications bases on
perceived risk. The score is derived from a formula that utilizes
the information provided within a credit bureau. The score is
inversely related to the risk a credit candidate poses to a lender
in terms of repayment. Simply put, the higher the score the better.
Credit scores which are commonly referred to as beacon scores have a
top end of approximately 800 with most individuals falling in the
500 to 700 range.
What does it mean to have “A,” “B,”
or “C” credit?
At some point you may have heard your
credit or someone else's referred to using the alphabet or more
specifically A, B, C, or D credit. These classifications are
generally related to one's credit score and are another way that
lenders group and categorize potential credit candidates. The
following credit score ranges are commonly used and accepted by most
lenders when rating one's credit worthiness.
Credit Score Rating
700 Plus A
699-670 B
669-640 C
639 and below D
Is it possible to improve my credit?
It is important to understand that
your credit file is not a fixed or static record, but rather a
dynamic and continually evolving representation of one's credit
picture. It is entirely possible to improve your credit, and, in
fact, this is a service that Swapalease.com offers. Click Here.
Do I need perfect credit to get
approved for a loan or lease?
It is important to note that just
because one does not have a high credit score or an "A" credit
rating, it is still possible to obtain credit. It just means that if
they are extended credit, it will more than likely cost them more in
terms of interest than an individual who scores higher due to the
lender's perceived risk. Also, be aware that your debt to income
ratio, professional status, and length of employment are not part of
the credit score equation; however, these factors are taken in to
account by lenders when making credit decisions.
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