Frequently Asked Questions & Answers About Credit Scores
With our continuous efforts to help better educate our customers about the importance of your credit score, our credit counselors have put together a set of common questions we are asked by consumers below. If you have a question that isn’t answered below, please feel free to contact us and one of our representatives will get back to you and help answer your question.
There are many real-life examples to choose from, nothing bigger than when your bank looks at your credit score before approving you for a mortgage. If they can approve you, your rates is directly related to your credit score – higher scores = lower rates, and lower scores = higher rates.
Credit scores doesn’t have anything to do with how much money you make, an individual with a low income might have excellent credit scores, and someone with a higher income might have low credit scores. In addition, your credit score is not tied to your bank or your creditors; banks and creditors will pull your credit scores to help them make informed decisions about whether or not to approve you for loans and/or credit, the scores are supplied by third-parties, not the lenders themselves.
Credit scores are constantly changing due to your actions, it is common for your credit score to change month-to-month, or day-by-day as information is reported by creditors. Creditors report information about your payments and financial obligations to the credit bureaus constantly.
FICO scores also have different types that are considered in the mortgage, auto, and insurance industries, and FICO is the major factor when it comes to your credit scores. When lenders start referencing qualifying credit scores, they are referring to your FICO score.
FICO score ranges from 300 at the lowest end all the way to a perfect score of 850.
- Equifax = BEACON
- Experian = PLUS
- TransUnion = EMPIRICA
Excellent: 781 and above
Bad: 500 and below
There are exceptions made for individuals who are getting a VA loan or FHA loan. FHA loans only require a 580 credit score, and VA loans have no credit score minimum for mortgages. However, the FHA and the VA don’t actually provide loans, they provide insurance to the financial institutions that actually provide the loans. They provide risk mitigation in case a consumer defaults on their mortgages.
With that said, consumers most likely won’t be approved for a VA or FHA loan with a credit score below 620. If you want to qualify for a mortgage, it is safe to say that you’ll need a credit score of at least 640. The best rates are available with a 720 credit score or higher.
Super Prime (740+)
Deep Subprime (<550)