Credit Report Scale

 

New Fed rules regarding the disclosure of credit scores make it essential that you understand what the credit report scale is all about. The new rules require banks and other lending agencies to disclose credit scores to consumers who have been denied credit or have been given credit on unfavorable terms. This gives consumers free access to their credit scores apart from the mandatory free credit report that they are entitled to from the nationwide credit reporting agencies.

The lender must also provide the consumer with a range of other information that will help them to understand why their credit score is so low. This should include the other possible credit scores based on the mathematical model the bureau uses to compute it and the date in which the score was computed as well as the four key factors that pulled it down. Experts said this would allow consumers to see which of the many credit scores being offered to them are actually being used by lenders to decide whether to give them access to credit or not.

How to Get Your Free Credit Report

Before discussing the credit report scale, you should get your free credit report. According to current Fed rules, the three major credit reporting agencies are required to give consumers a free consumer report every year if they ask for it; additional credit reports will be provided for a fee. Here are the ways you can get your free report. You can get your credit reports from the Annual Credit Report website. Keep in mind that you can ask for a free report each from Experian, Equifax, and TransUnion or three reports all in all per year. You can get your credit reports online and print them out or you can request your credit reports by mail by filling up the request form. You can also order by using the toll-free number. Don’t contact the thee credit reporting agencies directly to order your report since they only offer free credit reports through the site.

How’s Your Credit Score?

Credit scores range from a low of 300 to a high of 850. While there are a number of scales that show you how to read your credit score, they are generally the same with minor differences.

• A score of less than 580 means that your creditworthiness is very poor and you will have difficulty getting credit. To get a loan you may have to provide collateral or accept unfavorable terms such as a higher interest rate.
• On the other hand, a score of 720 and above indicates that you have outstanding credit and will easily be able to get loans at the most favorable terms.

In between these two extremes are various levels that are categorized in different ways to measure your creditworthiness. For example, if your credit score lands in the median (between 620 and 680), you have an average credit score on the credit report scale and will have little trouble getting loans but at not very good interest rates, or with terms that may require you to provide a down payment, for example.