When considering your application for a loan or credit, a lender will place much emphasis on your credit score. Their processes feed on the reasoning that the higher your score is, the more likely you are to settle your bills on time. And the lower your rating is, the less likely you are to repay your debts timeously (if at all).
What’s important to note is that each credit provider defines a qualifying score differently. One lender may consider you a great candidate, while others may think your “good” rating is still too low for their high standards.
The following can be used as a credit score guideline:
650 - 999: Excellent credit (minimum risk)
620 – 649: Very good credit (low risk)
600 – 619: Good credit (average risk)
581 – 599: Sub-prime (high risk)
1 - 580: Poor credit (very high risk)
Your credit score is calculated using a formula that includes your payment history, the age of your accounts, the amount you currently owe, the number of hard enquiries you have made, and any judgements or defaults that are in your name.