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Know if your credit scores are good enough

By Brian Anderson
Published: Wednesday, May 25th, 2011

Know if your credit scores are good enoughAn increasing number of consumers are making use of the offer for free credit scores and finding out their scores to gauge their ability to avail loans and credit cards. However, most of them are still unable to understand if their credit score is actually good enough to guarantee a secure financial life. It is important to understand the implication of credit scores to know the various options you can choose from if faced with a financial crisis.

The credit score of 850 is considered to be the key of the most secure financial future a person can expect. Banks and other lenders will be more than happy to have you in their list of customers. Credit card issuers will be willing to roll out the best deals and financial institutions will be more than glad to offer you the loan you so earnestly seek. However, this credit score is more of an ideal score and not a practical one. In the practical scenario, a credit score of 780 is considered to be good and can open the doors of financial freedom.

Only a meager 18% of the entire population has credit scores ranging between 800 and 850. 19% of them have scores between 750 and 800 and 16% of them have scores in the range of 700 to 750. Around 7% of the people have a credit score of below 500 which is considered to be a very low score by all lenders and reduces the chances of getting an approval from any lender. These customers are classified under the high risk category and face a lot of problems including unavailability of credit cards at favorable terms.

The score of 500 will definitely get you approval for the auto loan you are looking out for, but be prepared to pay through your nose since the interest rates and other charges are bound to be pretty high. If you are looking to avail mortgage, any score of below 650 and you will be shown the door. The minimum score to qualify is 620, but again, you cannot be assured of favorable terms and conditions.

Looking for that elusive credit card? If your credit scores are below 660, you can bid goodbye to your dreams. None of the major lenders are willing to take any kind of risk, especially after the economy slowdown that caused a significant loss of revenue.

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