Generally, in the credit world, it is hard to define the lowest credit score. It is due to the fact that lenders view credit scores differently. For some, your credit score may be high, while for others, it is just average. Though FICO can provide the range from 300 to 850, it will mainly depend on how lenders, banks, credit card companies and other financial institutions will judge your credit score.
What are the general interpretations of credit scores?
Lenders set up few guidelines on how to determine if one’s credit has high risk or low risk. Most lenders or creditors consider scores above 620 have an average or good risk. While account holders who have above 700 credit score have a very low risk and scores beyond 760 is the lowest risk based from formation of scores of FICO.
Who is getting the lowest credit scores?
Obviously, those are people new to credit, those who don’t own a credit card or any other financial accounts. Next, those who have accounts handled by collection agencies have delinquency records and may have filed for bankruptcy.
How long will I have the chance to improve my credit score?
Immediate attention and action is needed. It is advisable to review your credit report, to check any possible errors, to make sure everything is properly reported to credit bureaus. A credit score is the sum of all the information we have on our credit report.
How can I view my credit report?
Once a year, major credit bureaus are sending credit reports for all consumers for free. Once received, take time to review the information because for any errors you find, you have the right to dispute it. We can’t let a single or minor error pass because it can hurt our credit score.
The set of information you can find on a credit report include;
- Contact information- name, both present and previous addresses, contact numbers, etc.
- Credit summary- this will include the total number of financial accounts both previously and currently you have, like loans and credit cards. This includes also the total amount of debts you owe.
- Public records- though not all consumers have public records. This section shows information issued by the government or federal court like bankruptcy, tax liens, judgments, foreclosures, etc.
- Credit inquiries- credit inquiry has 2 types, the soft and hard inquiry. These inquiries are either made by an account holder or made by lenders who viewed your credit report to assess your credit worthiness before they approve your applications for getting a new loan or credit card.
- Account History- this shows the major information regarding all your financial accounts including name of lenders, balance information, payment details, status of the account, etc.
With all these information given regarding formation of credit scores, we are already aware what makes it or break it. It helps us to understand the importance of credit information that can lead to a very low score. Having the lowest credit score doesn’t mean it will stay forever on that level because it will depend on us; how we pursue a change to improve or even get the highest credit score possible. No one achieves it without effort because it is a continuous process that needs a lot of hard work and discipline.