A important parameter to know when dealing with your credit history is your credit score range. The higher your score, the better it is for you and your credit. It is important to break down this range to understand where you fit in.
If your credit score falls in this range, you have nothing to worry about. Lenders have identified this range as a range of scores for people who are highly likely to pay back their loans in a reasonable amount of time. If you are in this group, you will probably get a loan for as much as is reasonable given your income, and will get the most favorable rate terms.
This is still a good credit rating, and most people fall somewhere around this range. You still should have no trouble getting credit at reasonable rates, although there may be special premium rates that are reserved for borrowers with a higher score.
Here is where you will see a steady decline in borrowing power. Lenders have identified those in this score range as being more likely to default on a loan, so you may not be able to borrow as much as you want at the rate you hoped for. Again, the closer you are to the top of this range, the more likely you will be to get a loan easily and with favorable terms.
If your credit score is in this range, you have a real problem, and you need to get it up as soon as possible. If anyone is willing to give you a loan, it will often be at exorbitant rates, at a rate that shifts up to a more prohibitive rate after a given amount of time, or with a balloon payment that will be too large for you to pay. You are often better off building up your credit and applying for a loan later on down the road than accepting a loan at the terms offered to people in your credit score range.
Armed with this information, you can make better financial decisions, but only if you know what your credit score is in the first place. You can get a free credit score when you order credit monitoring from CreditScore.com. Once you have your score and know where you stand, you can decide if you’re ready to apply for a loan now or if you have some work to do first.