Generally, credit scores influence the approval or the denial of your application for a payday installment loan. Though most lenders do not require credit checks and accept borrowers even with bad credit, your credit score determines what loan terms you will be receiving.
There are several different credit scoring methods. Each lender may use different credit scoring methods. but most lenders of payday installment loans (about 75%) use FICO scores exclusively by visiting the website www.myfico.com.
The FICO credit scoring method was developed by Fair Isaac and Company. Credit scores range between 300 and 850 and will tell your lenders and creditors your creditworthiness depending on how you are paying your bills and loans. Basically, the higher the number of the credit score, the more creditworthy you are.
The three major credit bureaus in the country each have their own versions of the FICO credit scores. The Equifax uses the Beacon system, the TransUnion uses the Empirica system, and the Experian uses the Experian/Fair Isaac system. Despite the different names and methods, all credit reporting agencies base their versions of the credit scoring system on the original Fair Isaac FICO scoring method. Each of the credit scores are calculated with these systems and are still called FICO scores.
A consumer can get also their FICO scores from all the three credit reporting bureaus by logging on to www.myfico.com. Beware of using other sites to get your credit score because there are numerous “FAKOs” (or “fake” credit scores) circulating around that differ significantly with original FICO credit scores.
Aside from revealing the creditworthiness of a consumer, the credit score also tells how stable his finances are and what his attitude is towards handling credit. Usually, people with good credit scores are able to manage their finances wisely and maintain their monetary stability. On the contrary, those who have very low and poor credit scores are those who have been struggling with their loans and credits, and may even be experiencing bankruptcy. Generally, maintaining a good credit score needs responsible handling of payday installment loans and other credit lines, by paying them on time. Defaults and late payments reflect negatively on a consumer’s credit score.
Here are the ranges of credit scores:
Excellent credit score: 720 and Up
Consumers having this credit score range enjoy the best interest rates and repayment terms for payday installment loans and other loans. They are able to make major purchases without problems.
Good credit score: 680 to 719
Having this score range is good news. You are able to get decent terms from your payday installment loan lenders and creditors, though not as good as when you obtain credit scoreof 720 and above. Nevertheless, you can still enjoy favorable terms.
Average credit score: 620 to 679
This is the absolute minimum credit score that you can have to still get favorable loan terms.
Poor credit score: 580 to 619
If you have this credit score range, prepare yourself for higher interest rates and finance charges. But you can still build your credit score by carefully monitoring your credit reports and taking responsible actions with your finances. Remember that this is the lowest workable credit score range that a lender can still work with you.
Bad credit score: 500 to 579
If you are in this range, financing and loan terms will surely cost you big-time. For long-term loans (usually 20-30 years), the interest rates are usually higher by 3% than those with good credit. For shorter-term loans, the effects on the interest rate are more pronounced.
Miserable credit score: Less than 500
Consumers with this range of credit score will find it impossible to be approved of payday cash advances and other lines of credit. This also signals a need for drastic change in the financial status of the consumer along with credit counseling.
Credit scores determine the creditworthiness of a consumer. Where are your scores?