What is Credit?
When you find yourself wondering just what is credit exactly, talk to the team at PrimeLoans. We are happy to answer any questions you may have about credit in general and your specific score—as well as what your score means for your auto loan opportunities.
A simple definition of credit is someone’s ability to purchase goods and services now, in trust that payment will take place in the future. Credit is what makes it possible for most Americans to purchase large items, such as a house or a car, and smaller items ranging from washing machines to computers. Credit scores in the United States range from 301 to 850. They are generally broken down into the following categories:
• Excellent Credit: 750 and Above
• Good Credit: 700-749
• Fair Credit: 650-699
• Poor Credit: 600-649
• Bad Credit: Below 599
What’s a Good Credit Score?
Although the above categories are a solid starting point, different lenders may apply their own definitions to the ranges. This means they will have their own definition of what is a good credit score. Their definition of a good score might start at a lower score number if they are looking to approve a larger number of clients. This can be an advantage, since they might lower the score for someone with bad credit trying to be approved for a loan. However, the interest rates on a low credit score are still considerably higher than they are for someone with fair to excellent scores, so proceed with caution.
Your Financial Report Card
Credit scores are the result of your financial history, not to mention your debt levels and the age of your credit accounts. Most of your credit score comes from your ability to pay your bills on time. It is a prediction on how people will be able to handle their credit. Therefore, credit reports help lenders process loan applications in a faster, easier manner. Your score will determine how high or low your interest rate will stand when it comes time to take on a large loan (e.g. for a home) or a smaller loan (e.g. for a car).
Contact our team to learn more about what is credit and how it affects your financing. We are proud to serve clients nationwide.