Why your credit score may vary:
1. There are three credit reporting agencies – each with varying ranges of scores
2. Each credit reporting agency applies their own unique algorithm when determining your credit score, despite the information on each agency’s report being the same
3. There are different score models (FICO vs. VantageScore) and each have different versions of their score. FICO has 9 different versions of their score today.
Factors affecting your credit score:
In order of importance, each credit scoring model evaluates the following factors:
1. Payment history – Whether you have paid your past credit accounts on time or not.
2. Amount owed & utilization rate – How much do you owe, and do you have available credit or not.
3. Length of credit history – How long your credit accounts have been established.
4. Credit mix – What your mix of credit card, retail accounts, installment loans and mortgage loans is.
5. New credit – Amount of new credit requests you have made and opened in the past 24 months
What is a good credit score, and can I still qualify for a loan with a below average credit score?
Credit scores range from 300 to 850 depending on the credit scoring model, broken down as follows:
• 300-599 = Poor
• 600-669 = Fair
• 670-739 = Good
• 740-799 = Very Good
• 800+ = Excellent
A below average credit score typically will not disqualify you from obtaining a loan. Our Bank will evaluate the entire picture of the applicant and how the credit report fits with the rest of their financial makeup. Many times, an individual score is not the focus, but rather what contributes to that score and the story behind it. Often, we can overcome concerns by gaining a full understanding of the cause and what the applicant has changed to prevent future credit issues.
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