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What Does My Credit Rating Mean? | What Does My Credit Score Mean?

Many people who are in debt or financial trouble think that they should not declare bankruptcy because of what it would do to their credit score. However, The Consumer Federation of America found in a study that only one out of three Americans even understood what their credit score meant and how it is effected by their financial decisions.

Credit scores, also known as FICO scores, range from 300 to 900 - and a higher score is better. Most people have a credit score in the 600s and 700s, and anything under a 500 is considered low or poor. While a high credit score can get you low loan and mortgage rates, it can also make you an ideal renter and a good job candidate. In general, a high credit score can make it easier for you to buy a home, a car, or a new business.

Your credit score can be damaged by late payments, unwise financial decisions, and debt. Specifically, infrequent payments, exceeding your limit, or not having any credit can lower your credit rating. Although bankruptcy will damage your credit score for at least a few years, the vast majority of people who are thinking about declaring bankruptcy already have very poor credit scores.

After declaring bankruptcy, you can immediately begin to repair your credit score through on time payments, taking out small, smart loans, and making wise financial decisions.

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