Because technology is so advanced today, almost every person uses bank cards or credit cards instead of cash. On the other hand, when people want to buy a car or a house, vast majority of them need additional resources other than their savings. To this extend, banks exists. People needs, loans or credits for their mentioned expenses.
When the topic is about loans or credits, people are curious about these questions: “Do all banks lend Money to everyone under the same conditions?” or “Which criteria are the most important for the banks, when they are lending Money?” or “Is there any chance to barrow Money with lower interest rates?” etc. To answer these questions, we should know about credit score.
What is credit score?
Credit score is a scoring system, that is formed as a result of collecting and analyzing all individual loans such as credit card, consumer or housing loans and bank account transactions, in a common place.
How the credit score is calculated?
For calculating a credit score, it is essential to predict future payment performance based on the past payment performance of the customers. If a customer pays his or her debt regularly and in time, this group of customers qualified as “low risk customer”. It is assumed that this group with little risk, will pay the loan they receive properly. On the other hand, people who had difficulties to pay their bills, loans or credit card debts qualified as “high risk customer”. It is most likely fort he people in this group to have difficulties to pay the loans in the future. And while the low risk customers get high credit score, controversely the high risk customers will get low credit score.By the way, for a person who has no interaction to the banks, there would be no credit score unless he or she make some transactions.
What is the highest credit score?
Every country has different evaluation sytems for credit score. The indicators effect the score are almost same, however the scores are variable. We plan to mention some scoring systems and lowest and highest credit scores below:
1.What is the highest credit score in the USA
FICO Score is one of the most widely used credt score in the USA. The lowest score is 300 and the maximum score is 850. The higher score means lower risk.
- If your FICO Score is lower than 580, this refers to “Poor Score”. This means it is more likely not to get any loan or credit for those in this range.
- If your FICO Score is between 580-669, this refers to “Fair Score”. This means for those in this range are risky and may be a little chance to get a loan or a credit.
- If your FICO Score is between 670-739, this refers to “Good Score”. This means it is more likely to get a loan or a credit with proper interest rate for those in this range.
- If your FICO Score is between 740-799, this refers to “Very good Score”. This means it is more likely to get a loan or a credit with lower interest rate for those in this range.
- If your FICO Score is more than 800, this refers to “Exceptional Score”. This means, with this credit score, you can take a loan or a credit with the lowest interest rate possible.
2. What is the highest credit score in Australia?
People in Australia can get two different types of credit score. One of them is Equifax Score, and other is Experian Score.
The Equifax Credit Score is between 0-1200. If a score between 0-509, this means your score is “Below Average”. Banks more often rejects the applicants with this credit score. “Average” Score in Equifax is between 510-621. When you get an average score, you still defined as a risky customer. The credit score between 622-725 refers to “Good” credit score, and it is most likely to get a loan or credit for a person who receive this credit score. The score between 726-832 is “Very Good” Score. And the score between 833-1200 is “Excellent” Score.
In Experian Credit Score, it is generally the same. Only the ranges are different. In Experian, the credit score between 0-549 refers to “Below Average”, 550-624 refers to “Average”, 625-699 refers to “Good”, 700-799 refers to “Very Good” and 800-1000 refers to “Excellent” Score.
What other criteria are important to get a loan or credit?
The credit score is not the sole evaluation criterion, although it is an important data for loan or credit approval. It is possible not to get a loan or credit for a person with high credit score, because of other criteria. Or a low-grade customer can use credit if they can explain the reasons of problems they have in the past. Let’s take a look at other criteria that are important fort he banks in addition to credit sccore:
Your total debts, monthly installments and income
When the majority of the banks assess your income, they set the maximum amount of credit you can pay per month as half of your monthly income. For example, suppose one person earns $ 2,000 per month. This person will be deemed to be able to pay a maximum of $ 1,000 credit per month by the majority of banks. The closer this person’s monthly credit payments are to $ 1,00, the lesser the additional credit amount he may receive.
Your employer and position at your work
While the banksa re evaluating your credit application, it is important whether you are a government employee or a private sector employee. Basically this distinction is due to assumption that civil servants are hard to get out of business and their incomes are more regular. Those with more regular income are less likely to be able to pay their loans.
If the applicant is not a government employee, banks are also investigate for the company of the credit applicants, whether the employer (company) of the applicant has a sound financial structure and pay their employees’ salaries regularly or not.
If you have a low credit score, you can also read the article about How To Rise Your Credit Score 4 Strange Ways.