What it is

Your credit history is a record of how you ’ ve managed your credit over clock. It includes credit accounts you ’ ve opened or closed, deoxyadenosine monophosphate well as your refund history over the past 7-10 years. This information is provided by your lenders, a well as collection and politics agencies, to then be scored and reported. The difference between your credit grudge and credit report

Why it matters

A estimable credit grade shows that you ’ ve responsibly managed your debts and systematically made on-time payments every calendar month. Your credit score matters because it may impact your interest rate, term, and credit rating limit. The higher your credit score, the more you may be able to borrow and the lower the interest rate you could receive.

For example, with a good or excellent credit rating score, you might qualify for a lower pastime rate and monthly requital on a loan of $ 15,000. The case below explains how your accredit rat may impact your annual share rate ( APR ) and monthly requital. Rates shown are for exemplifying purposes entirely.

How to get your credit report and credit score

You can request your credit report at no price once a year from the crown 3 credit report agencies ― Equifax®, Experian®, and TransUnion® through annualcreditreport.com. When you get your reputation, review it cautiously to make sure your credit history is accurate and complimentary from errors. It is authoritative to understand that your release annual recognition report card may not include your recognition seduce, and a coverage agency may charge a fee for your credit score. Did you know? Eligible Wells Fargo customers can easily access their FICO® Credit Score through Wells Fargo Online® – plus tool tips, and much more. Learn how to access your FICO Score. Do n’t worry, requesting your grudge or reports in these ways wo n’t affect your score.

What your credit score means

Your credit score reflects how well you ‘ve managed your citation. The 3-digit sexual conquest, sometimes referred to as a FICO® Score, typically ranges from 300-850. Each of the 3 credit report agencies use different scoring systems, so the score you receive from each representation may differ. To understand how scores may vary, see how to understand credit scores.

Wells Fargo credit score standards

760+, Excellent You broadly qualify for the best rates, depending on debt-to-income ( DTI ) ratio and collateral value. 700-759, Good You typically qualify for citation, depending on DTI and collateral value, but may not get the best rates. 621-699, Fair You may have more difficulty obtaining citation, and will probably pay higher rates for it. 620 & below, Poor You may have difficulty obtaining unbarred credit. No credit score You may not have built up enough credit to calculate a seduce, or your credit has been inactive for some time.

What it is

Capacity is an indicator of the probability that you ‘ll systematically be able to make payments on a newfangled credit account. Lenders use different factors to determine your ability to repay, including reviewing your monthly income and comparing it to your fiscal obligations. This calculation is referred to as your debt-to-income ( DTI ) proportion, which is the percentage of your monthly income that goes toward expenses like rent, and loan or credit card payments.

Why it matters 

Lenders look at your debt-to-income ( DTI ) proportion when they ’ rhenium evaluating your credit application to assess whether you ’ re able to take on fresh debt. A low DTI proportion is a good indicator that you have adequate income to meet your current monthly obligations, take concern of extra or unexpected expenses, and make the extra requital each month on the new credit report.

How to calculate your debt-to-income (DTI)

Learn how DTI is calculated, see our standards for DTI ratios, and find out how you may improve your DTI. Understand your debt-to-income ratio

Our standards for Debt-to-Income (DTI) ratio

once you ’ ve calculated your DTI proportion, you ’ ll want to understand how lenders review it when they ‘re considering your application. Take a look at the guidelines we use : 35% or less: Looking Good – Relative to your income, your debt is at a manageable level You most likely have money left over for saving or spend after you ’ ve paid your bills. Lenders generally view a lower DTI as favorable. 36% to 49%: Opportunity to improve You ’ ra managing your debt adequately, but you may want to consider lowering your DTI. This may put you in a better put to handle unanticipated expenses. If you ’ re looking to borrow, keep in mind that lenders may ask for extra eligibility criteria. 50% or more: Take Action – You may have limited funds to save or spend With more than half your income going toward debt payments, you may not have much money left to save, spend, or handle unanticipated expenses. With this DTI proportion, lenders may limit your borrowing options .

What it is

Collateral is a personal asset you own such as a cable car, a savings explanation, or a home.

Why it matters

Collateral is significant to lenders because it offsets the risk they take when they offer you credit. Using your assets as collateral gives you more adopt options ― including credit accounts that may have lower concern rates and better terms.

Using collateral

If you have assets like equity in your home, you could potentially use your dwelling equity as collateral to secure a loan ― this may allow you to take advantage of a higher credit limit, better terms, and a lower rate. But, remember, when you use an asset as collateral, the lender may have the right to repossess it if the loan is not paid back .

What it is

Lenders evaluate the capital you have when you apply for large citation accounts like a mortgage, home equity, or personal loanword report. capital represents the assets you could use to repay a loanword if you lost your problem or experienced a fiscal reverse. capital is typically your savings, investments, or retirement accounts, but it may besides include the amount of the down payment you make when you purchase a home.

Why it matters

capital matters because the more of it you have, the more financially secure you are ― and the more confident the lender may be about extending you credit.

What it is

Conditions refer to a variety of factors that lenders may consider before extending credit. The conditions may include :

• How you plan to use the proceeds from the loan or credit account.
• How your loan amount, interest rate, and term may be impacted by market conditions or the state of the economy.
• Other factors that may impact your ability to repay the debt ― for example, a mortgage lender wants to know if the property you’re buying is in a flood zone or in an area prone to wildfires.

Why it matters

Conditions matter because they may impact your fiscal situation and ability to repay the loan. Lenders may besides consider your customer history when you apply for raw credit. Since they may evaluate your overall fiscal province, the relationship you ’ ve established with them can be valuable when you need more credit rating .