Do your customers understand their credit scores and what factors can affect them? Here are few helpful tips.
We all know a good credit score is important, but defining what ‘good’ is can be tricky. Credit scores can differ depending on the bureau and based on the type of information they pull for each customer. Plus, the definition of a good or even acceptable credit score can differ between lenders. What works for one, may not work for another.
Wow. What a headache. With this much uncertainty, what can we do to help customers navigate the credit landscape and find what’s best for them?
A Numbers Game
Credit scores are designed to provide a quick reference point from which a lender can determine the amount of credit and the terms (interest rate, etc.) to extend to a customer. As myFico explains, ‘When a consumer applies for credit – whether for a credit card, an auto loan, or a mortgage – lenders want to know what risk they'd take by loaning money.’
When taking a broad look at what counts as a good credit score, consumers can use these numbers as the standard.
- FICO Score range: 300-850
- VantageScore 3.0 range: 300–850
- VantageScore scale (versions 1.0 and 2.0): 501–990
- PLUS Score: 330-830
- TransRisk Score: 100-900
- Equifax Credit Score: 280–850
Despite the various ranges, the basic rule is the higher the number, the lower the risk. Credit.com sums it up by saying, ‘Consumers with higher scores are more likely to get approved for credit, and to get the best interest rates when they do. And they are more likely to get discounts on insurance.’
Practice Makes Perfect
So, what can customers do to achieve top scores? Well, a lot of it comes down to basics. Kiplinger has a handy list that includes helpful tips like paying on time, minimizing use of available credit, and having a lengthy credit history.
CompareCards.com credit card expert Jason Steele adds, ‘It’s important to have a healthy mix of lines of credit, including credit cards, auto loans, mortgages, and even personal loans. This shows that lenders are willing to trust you with their loans. And the more available credit you have, the lower your credit utilization ratio will be.’
But what about a dreaded credit misstep? As you might expect, it’s imperative that customers repair credit as quickly as possible. For example, a Secured Credit Card can be useful to establish or even repair credit history.
Want your customers to get out front of any potential credit missteps? Fortegra’s Credit Protection solutions can provide peace of mind that one’s credit is protected and customers have access to a safety net in the event of a bad run.
Dive deeper into your customer’s situation to better understand what credit protection services are a good fit for them:
- Credit Life – Loan balance protection in the event of a borrower’s death.
- Credit Disability – Loan payment protection providing financial support during an illness or injury-related work stoppage.
- Credit Personal Property and Auto Physical Damage – Protection for property pledged as collateral.