In effect, yes, a 700 is good, but it’s not great.  You are not considered much of a risk to lenders, so your chances of being approved for a loan are high, perhaps just as good as someone with an even higher score.  The only difference for you would be the terms of the loan; you will most likely have to pay a higher interest rate than the person with the better score.

The interest rate is a way for the creditor to safeguard their investment as much as possible, making sure they’ll get it back.  The lower your score, the riskier of an investment you present, and the higher your interest rate goes.  And that goes for all loans: mortgages, auto loans, equity loans, personal loans, etc.

To guarantee yourself the best rates possible, you should consider working to raise your score.  Even a 720 will be better than a 700, as you’re officially part of the “excellent” category then.  A higher score is also a better way to ensure that there is less discrepancy between your scores from each of the three credit bureaus.  Each one will rank you differently according to their scoring formula; so you could have a 720 from Experian and a 726 from Equifax but a 710 from Trans Union, leaving one in the “good” category instead of “excellent”.

A discrepancy like the example isn’t really enough to ruin your chances of getting a good loan, but even that tiny jump into the next category could be the difference between an okay interest rate and a great interest rate.  You can raise your score by paying your bills on time and in full, keeping your balances low, and using your credit responsibly.  After that, let time do its work—the longer your positive history, the higher your score can go.

Some people insist that creditors are required to report to the credit bureaus once a month.  But it’s also possible that if you have no significant activity, positive or negative, the information on your credit report may not change during that time.  So in some cases, the frequency depends upon your creditor and your level of activity.

Other creditors may update the bureaus daily, regardless of activity.  For this reason, it’s possible for your credit report and even your score to alter slightly during a loan application process.  You should constantly monitor and be in control of your activity at all times.  If a lender, particularly a mortgage lender, rechecks your credit right before final approval or closing (which is highly likely in the current economy) and your score has changed due to newly-reported information, you could suddenly be denied.

Some creditors may wait until the last possible minute to report positive information, such as resolving a debt, but they’ll be quick to report anything negative.  The lower your score is pushed, the more they’ll be justified in charging you for interest.

There is some information you can’t prevent from hitting your credit report, like a bankruptcy or being sent to collections.  But if it’s a simple item like a late payment, some lenders will grant you leeway your first time.  If it’s good information you want reported, simply call and ask.  Your creditor is not required to report to all of the bureaus or even agree to your request, but sometimes they can be persuaded.  There may be a fee involved, but if adding the information could significantly raise your score, it might be worth it.  It’s your credit report; you just need to take control.

If you hold a position that deals with money, valuables, sensitive information, and the like, your boss may periodically check your credit report.  If your score is low or you continue to add negative history like late payments or defaulting on a loan, it may represent to your boss that you are not dependable.  Right or not, you may appear more likely to steal cash or valuables in an attempt to catch up on debt, and if you are in a security or government position, your boss may not want to trust you with sensitive information.

No matter the reason, your boss does need your permission to run a credit check.  If you are fired as a result of what is on your report, your boss is required to tell you so and provide you with a copy, an explanation, and the name of the bureau the supplied the report.  You then have the right to file a dispute, particularly if the information used to justify letting you go was an error or otherwise incorrect.

The unfortunate fact is that by time the dispute is resolved, your old position may be filled.  You might not find it to be a completely fair practice; hopefully your boss would consider outside forces and/or give you time to improve your score.  Let this stand as one more reason to maintain a high credit score and check your credit report often: don’t let your boss blindside you.

You already know that your credit score will determine whether or not lenders will approve you for loans, as well as what interest rate you’ll have to pay. But that score is also being used in other ways today–potential employers, your landlord, and yes, your insurance agent, may all check your credit history today. Just as you’ll pay lower interest rates on loans if you have a high score, you’ll pay less on your car insurance, too.

The two ideas may seem unrelated, but to your insurance agent, a better credit score indicates that you are a good driver. Of course, if your score is low, it may seem unfair to tie those things together, especially if you know you’re a good driver. Your defense against that is to maintain a clean driving record. In many cases, that can be enough for your agent to lower your payments, but if you can maintain a higher credit score, too, that simply gives you more opportunity to pay even less.

What would the reasoning be for increasing your rates due to a low credit score? Employers may choose not to hire you due to a low score because your history of poor financial management skills could mean you are more liable to steal or lie or even search for a different job right away because you wouldn’t be able to pay off your debt with the salary they can afford to give you. Your insurance agent may follow similar logic. If you have been struggling with money, you might be liable to purposely cause a car accident in order to collect the insurance payout.

Your driving record, where you live, and the length of your drive to work can all have an effect on what you pay for your car insurance. If you know your credit score is low, do your best to improve it. Once it’s high, you might want to make sure that your agent DOES consider it when determining your rates so that your credit score can be used for your advantage.

Manage Your Credit Cards

Too many credit cards are not necessarily bad for your score, but how you manage them is particularly important.  Initially, if a creditor sees that you have many open lines of credit, it can indicate that you are a risk, especially if most of your cards are not from any of the bigwigs like MasterCard and Visa.  It may appear that you are irresponsible with your finances or perhaps opening more accounts in an attempt to manage older ones that have gone awry.

As with any credit, if you pay on time and keep your balances low, a lot of credit cards may not hurt you.  Even if the accounts look questionable, your score may only lower by a few points.  Be careful not to use up your available credit with new purchases, even if you do pay in full and on time.  Your highest balance is reported to the credit bureaus, without the tag line of “paid in full,” and this can affect your score.

Keep Credit Balances Low

Store credit cards can put you in a lot of trouble if you don’t stay on top of them.  They usually come with high interest rates, so once you miss a payment, the negative impact they will have on your finances and your credit score will not be worth any discounts you’re getting.  You also don’t want to open too many in a short time frame, as you’ll appear to be erratic with your finances.

If you’re wise about your credit card decisions and resist the temptation of a new card just to get 10% off, a number of open accounts can actually have a positive impact on your credit score if you manage them well and keep them open long enough.  A long history of well-managed accounts works to your benefit.  Open new credit for a valid reason that will benefit your financial future, not simply offer a quick discount of a few dollars.

Credit Score Software

Beacon is the name of the scoring software used specifically by Equifax to calculate your credit standings.  Experian uses FICO, and TransUnion uses Empirica.  The formula used in each version is different, which is why you’ll have a different score from each bureau.  Also, the software for all three bureaus is occasionally updated and can result in a change in your score even if you have minimal changes in your history.

Credit Scoring Formula

It seems that the mathematical formula for determining your credit score is locked away in a secret dungeon.  However, you can expect certain items on your account to be weighted similarly to the following:

• Late payments, bankruptcies, collections, and similar negative history will affect about 35% of your score
• Your current open accounts will affect about 30%
• The length of time you’ve had the accounts will affect about 15%
• The type of credit (revolving, investment, store card, etc.) will affect about 10%
• Applying for new credit or hard inquiries regarding loans will affect about 10%

Keep Your Score High

You’ll want to avoid late payments on any of your accounts, as that can lead to the bigger problems of bankruptcy and collections.  Keep your balances low in comparison to your credit limit, and avoid applying for new credit cards too often.  Similarly, if you’re going to apply for a large purchase such as a house or a car, check your credit score (or your Beacon score, or FICO score, or Empirica score…or ideally, all three) a few months before meeting with the lender.  Don’t give them a chance to see any errors or negative activity that you can fix ahead of time.  If you wait too long, that hard inquiry and subsequent denial will hurt your score even more.

So don’t panic if someone asks what your Beacon score is.  Just panic if it’s low, and start taking steps to fix it!

Your creditor views you as an investment.  They are taking a chance when lending you money, and they need to make sure they will get that money back.  The best way for them to ensure this is to apply an interest rate to your loan.  In other words, you’ve got to pay them in order for them to pay you.  The amount that you’ll have to pay is determined by your credit score.

If your score is high, it means that you are dependable and very likely to stay current on your payments.  You are a low risk, so creditors will give you the better interest rates because they know their investment will be returned.  However, the lower your score gets, the worse your history probably is, and the less a creditor will trust you.  If they take a chance and approve you for a loan, they protect their investment by charging you a higher interest rate.  The idea is that the higher rate will prevent you from defaulting and forcing them to spend time and more money in attempts to collect from you.

Take a look at your credit report at least a few months in advance of applying for a loan, and the earlier, the better.  This will give you time to take steps to improve your score if you find negative history on your report, as well as time to dispute any errors.  If you have given yourself enough time to rebuild a positive history, you will be more likely to receive a lower interest rate.

If your score sits between 800 and 850, you basically have flawless credit and are on your way to a great loan that can buy you a nice tropical island.  At minimum (and probably more realistically, anyhow), you will receive the highest credit limits and the best interest rates because you have shown yourself to be completely dependable.  A creditor won’t have to think twice about investing in you.  Be careful, though, if you just got your first credit card and see that you have an 800.  You have this score because you haven’t had time to add any negative activity, but you also haven’t had time to build a positive history.  Creditors will still be wary of you this early, regardless of this initial high score.

If you are between 720 and 799, you have “excellent” credit and should have nothing to worry about when looking for a loan.  You’re still eligible for high limits and low interest rates.  Once you get into the 680-719 range, you become part of the “good” category.  You’re doing fine but might end up with a slightly higher interest rate than someone in the next category up.

If you’re in the 620-679 range, you’re in the “good/okay” sector.  You rank right there with the average borrower, and you could still acquire a decent loan, but you may have to try a few different lenders before being approved.  The highest credit limits and lowest interest rates unfortunately may not apply to you in this category.  There may be some restrictions on your loan that someone in a higher category wouldn’t have to accept.  This is where you might want to worry and begin taking steps to improve your score.

Once you hit the 580-619 range, you are officially in the “bad” category.  You are considered a subprime investment, a definite risk for a creditor.  Suffice it to say you will have a rough time securing a loan.  If you are lucky enough to get one, it will likely be a low amount of credit and the interest rate might end up costing you more than the loan itself.  You should consider seeking some professional advice.

If you’re below 580, and especially below 500, your credit is just plain ugly.  You probably have some big black marks on your credit report, such as being sent to collections, going into foreclosure, or filing for bankruptcy.  Creditors will not even want to waste time on you because it is obvious to them that you have made some serious mistakes.  You definitely want to seek help.  It will take time to dig out of your hole, but if you stick to it and are successful, the time spent towards improving your score can only benefit you.

You probably already know that a high credit score and a clean history puts you in good standing for receiving loans, mortgages, etc., with a high limit and low interest rate, but it can also put you in good standing with a potential employer.  If your score is high, it can indicate how responsible you are and show the strength of your character.  It shows that you can be reliable and trustworthy.

If your score is low, it can raise some flags.  Perhaps your score is low mainly because your debt is high.  An employer might determine that you would not be able to pay down your debt with the salary they are willing to pay, which may mean that you could be searching for another job soon after starting with them.  A high debt could also cause the employer to believe that you might be inclined to steal or accept bribes, especially if you are applying for a position where you would be handling cash or cutting checks and managing expenses.  If your score indicates that you have been irresponsible with your own money, an employer will not want to risk letting you handle theirs.

Employers do use your credit information simply as a way to verify previous employment and your social security number.  Be advised that they do legally need your permission to check your credit (but if you deny, know that that doesn’t look good).  If they deny you the position due to your credit history, they must inform you of the fact and provide you with a copy of the report from the company they used.  But unless you can point out a major error that would raise your score if removed, you’re still out that new job.

This is all yet another reason why you want to be aware of your credit score and keep it high.  Make sure to get errors removed from your report right away and close any accounts that you no longer use that might be hurting your score.  If you have negative history, such as being sent to collections or going through a divorce or foreclosure, take action to begin improving it.  It will take time, but time is exactly what helps your score.  The longer your positive history, the better your score, and the better your potential for being hired for your skills rather than denied for your credit history.

In addition to using your credit score e to determine how likely you are to pay your rent on time, real estate owners renting out their properties can use your credit report as a “responsibility gauge.” It’s the same  reasons why hiring employers pull your credit when deciding whether or not to extend a job offer to you. Your credit rating is one of the best indicators as to how responsible you are.

If you aren’t responsible enough to manage your own money and pay your bills, how can a landlord trust you to properly care for their property worth hundreds of thousands of dollars?

If you are in a position where you need to rent with bad credit, there is a solution…

How to Rent with Bad Credit:

There are a couple things you can do to convince a landlord to allow you to rent their apartment or house even with damaged credit. First, seek housing for rent from individuals rather than companies. They will be easier to deal with and can make exceptions. If it is currently a “renter’s market,” you fair a better chance of being able to make a deal, but when the real estate market is not doing so good, landlords generally have more applications to choose from and can afford turning you away.

The first thing you can do is try to explain why your credit is damaged. People like to rent their places to people they like. If there is a legitimate reason that the landlord can sympathize with you.

You can also try paying a larger security deposit or a few months rent up-front. Money talks, and investors who own rental properties can always benefit from having more cash on hand. If that doesn’t work, see if they will be willing to rent with bad credit to those who have a co-signer. Try to find a family member or friend who will back you up and help you secure that rental agreement.

Of course the best possible solution is to raise your credit score before you give the landlord the right to pull your credit. This is something that is much easier than most people realize and can be done rather quickly. Just an increase in a few points can move the needle from bad a fair credit rating to good credit, which makes a big difference in the eyes of the person renting out the apartment our house.

Access your credit information online for free to see where you currently stand (click here).