Credit score or credit scar? Which best describes your finances?

Woman peeking behind a blank white board.Your credit score, that simple three-digit number, tells the world how worthy you are of a loan. It describes your future risks and past loans and overall financial history. Is yours a healthy number or has it been scarred by past financial events and decisions? How will a payday loan affect it?

Credit score numbers

Your credit score reflects many elements of your financial history. Your credit score is also sometimes called a FICO score, for Fair Isaac and Company, and it can be a number between 350 and 800. Higher numbers are considered better scores. In general, 700 and above is a very good to excellent credit rating. A score of 680-699 is a good score, 620-679 is fair and at 580-619, you might still be able to get a loan, but at a high interest rate. A credit score of 580 or below is considered bad credit and you most likely will not be able to get a loan. Let’s take a closer look at your credit score number.

  • Payment History and Amount Owed: 65 percent of your credit score is made up from your payment history and amounts owed. So if you have missed some payments and carry a lot of debt, you have done some serious damage to your FICO score. Most credit scarring happens from just these two factors.
  • Length of Credit History: The length of time you have had credit contributes 15 percent to your score. You are considered financially healthy if you have had more experience managing your payments and have had longer to show that you pay on time and are, therefore, a responsible borrower.
  • New Credit and Type of Credit: Each contribute at 10 percent. Potential lenders don’t want to see that you are always searching for and acquiring more debt, such as credit cards. And debt may be classified into types, as well. Credit card and revolving debt will count against your score more than a home mortgage, which is considered an appreciable investment.

Your personal credit score and payday loans

So, is your credit at a healthy 700 or is it scarred at 590 from missing a few payments? Making payments on time is vital to your credit score and your future ability to get new loans. If you find yourself in a short term financial emergency and need an unsecured loan fast to pay your bills on time, consider an online payday loan. Getting an online payday loan is a fast and easy process, and it can get you as much as $1,000.

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