What is a credit score?
When thinking about filing for bankruptcy, many people are hesitant to do so as they are worried about the effect it will have on their credit score. So, what exactly is a credit score?
Your credit score is a judgment about your financial health, at a specific point in time. It indicates the risk you represent for lenders, The credit-reporting agencies Equifax and TransUnion use a scale from 300 to 900, with 900 being the highest rating. The higher your score, the lower the risk for the lender. Lenders may also have their own ways of arriving at credit scores. In addition, lenders must decide on the lowest score you can have and still borrow money from them. They can also use your score to set the interest rate you will pay.
How is your credit score viewed by lenders?
300-575 = 'poor'
576-629 = 'fair'
630-679 = 'good'
680-750 = 'excellent'
750-900 = top rating
Check out this blog to find out how credit scores are calculated.
How can I improve my credit score quickly?
Hold a steady job, make a budget and stick to it, pay in cash as soon as possible, and save money to build up your assets. This will help improve your credit score. Taking out new loans from your financial institution and making your payments consistently will also show that you have recovered from your financial troubles.
If you have questions about how bankruptcy will effect your credit score, contact us today.