If you are wondering why a lender refused your loan, a poor credit score can be to blame. Lenders see your credit score as a key indicator of your capacity to pay back debts. A three-digit numerical summary of your whole credit history is your credit score. The Credit Information Report, or CIR, is created based on information obtained from lenders. Still, confused so let’s answer some important questions such as what is credit scores and What’s considered a good credit score?
A credit score: what is it?
Your likelihood of making timely loan payments is predicted by your credit score. Your credit score is generated by a scoring algorithm using data from your credit report. Your credit score is generated by businesses using a mathematical formula known as a scoring model and data from your credit report.
A normal credit score is based on several factors, including:
- Your history of paying bills
- The debt you currently owe is
- The quantity and nature of your loan accounts
- How long have your loan accounts been active?
- How much of your credit is being used right now
- New credit applications
- How long ago was your bankruptcy, foreclosure, or having a debt sent to the collection?
A Good Credit Score: What Is It?
Even though ranges differ based on the credit scoring model, generally speaking, credit scores between 580 and 669 are regarded as fair, 670 to 739 as good, 740 to 799 as very good, and 800 and up as exceptional. Higher credit scores indicate that you have previously exhibited responsible credit conduct, which may provide prospective creditors and lenders more assurance when assessing a credit request.
Those with credit scores of 670 or higher are often considered to be acceptable or lower-risk borrowers by lenders. Those with credit scores between 580 to 669 are typically referred to as “subprime borrowers,” which means they would have a harder time getting approved for better loan terms.