Your credit report is vital if you want to take out any kind of loan anytime. Your credit report is basically the reflection of your financial responsibility. The three major credit bureaus, Experian, Equifax, and Transunion each create your credit report based on the reporting that your creditors provide them. At times, this information is incorrect if your creditors miss out on providing information on a cleared debt and so on. At such times you need to go through the process of credit repair and dispute the negative items on your credit report and get them removed. This will increase your credit score.
Why is your credit score important?
Your FICO credit score is calculated on the basis of the reports published by the three major credit bureaus. As a result of this your credit score gives a direct judgment of the state of your credit and how well you handle loans. When you apply for loans, your lender will check your credit score first. Your credit score ranges from 300 to 850 and they can be divided into many categories. These categories are described as follow;
- Above 800 is excellent credit score and you will get the best of the loan terms and interest rates
- 799 to 730 is great credit score and you can get loans at a good interest rate.
- From 680 to 729 the credit is considered to be good credit score and you won’t have any problem in getting a loan at suitable interest rate.
- Between 580 to 679 are average credit score and you can qualify for a loan but not at a very good interest rate.
- 500 to 679 is a bad credit score and you will have quite a difficult time to get a loan for yourself.
How do auto insurers review your credit score?
Auto insurers check your credit score in order to judge your responsibility with your finances. Along with this, the history of your driving record is pertinent in deciding the amount of coverage and the terms and conditions you will get for your insurance. Thus the rate offered by an auto insurer will depend on the credit history that you are carrying. Hence it is important that you improve your credit score so that you can get the best auto insurance for yourself.
Conclusion
Don’t apply for new credit too often. Whenever you apply for a new credit card or loan, the lender does a credit check. Each time this happens, your credit score drops a little bit. If you do it a bunch, your credit score can drop significantly.