Credit Scores: What You Need to Know

From scrapbooks to yearbooks to the hundreds of photos on your phone, we love taking a look back at the snapshots of our history — at the things we did, at the people we were, at the events that shaped and formed our lives.  

It’s not a stretch to think of your credit score and credit report in the same way. After all, they’re essentially snapshots of your shopping history. And when you want to shop for a major life item, lenders and retailers who offer financing look at that score and history to determine your creditworthiness. So we want to help you understand what a credit score is, and how it affects your ability to shop.

Credit Score 101

Let’s first dive into some basic facts: If you have any kind of credit history (e.g., use store credit cards, have taken out a loan, paid rent that has been reported to the three major credit bureaus), then you have a credit score (i.e., a FICO score, or a numerical rating) that will fall within a range between 300 and 850. This score indicates the overall health of your credit record — the higher the number, the better your credit looks to lenders.

There are different ranges of consumer credit scores as defined from poor credit to exceptional credit:

Poor | 300 – 579

Fair | 580 – 669

Good | 670 – 739

Very Good | 740 – 799

Exceptional | 800 – 850

Lenders (such as a bank) look at this number to decide how likely it is that they will be repaid on time. (1) A higher credit score indicates you are a lower-risk borrower who is more likely to make on-time payments. On the other hand, a lower credit score indicates you are a higher-risk borrower who may not be likely to make on-time payments.

Common Factors That Can Affect Your Credit Score 

So what are the factors that determine whether you are a “low-risk” or “high-risk” borrower in the proverbial eyes of any given lender? Here are common factors that can affect your credit score: 

• Types of accounts in your name: This considers whether you’re managing both installment accounts (i.e., a car loan) and revolving accounts (i.e., a credit card or apartment rent). Showing you can manage both can help your score. 

• Credit usage: How many of your accounts have balances, how much you owe and the portion of your credit you’re using for revolving accounts can affect your score. 

• Payment history: Making on-time payments on your credit accounts can help your score. Missing payments or making late payments (sometimes, even just once) could significantly hurt your score. 

• Length of credit history: This includes the average age of your credit accounts, along with the age of your oldest and newest accounts.  

• Recent activity: This considers whether you’ve recently applied for or opened a new account. 

 It can be quite the balancing act to have all of these factors work in your favor. Educating yourself on what can affect your credit score — and future major purchases, such as a car or a house — is the first step toward practicing disciplined shopping habits. It’s a lot less tempting to use that credit card impulsively or to treat yourself in the moment when you know it may hurt your chances of getting something you truly dream of owning someday. 

Why Your Credit Score Is So Important

Your credit score is used to help lenders and credit card companies decide whether they will qualify you — or deny you — for a loan, line of credit or other financial assistance. Many retailers that offer a wide range of major product categories (furniture, appliances, electronics, jewelry and more) will only offer credit and financing to those consumers who are creditworthy — that is, those consumers who have a strong credit profile and exhibit a high likelihood of paying off their debts. Same with mortgage lenders, auto lenders and the like.

So are you creditworthy? A quick web search will pull up numerous ways you can check your credit score and review the details of your credit report (i.e., your credit history), the details of which will determine your ultimate score.

The Acima Leasing Difference: An Alternative to Financing 

Acima Leasing offers lease-to-own transactions* to qualifying customers as an alternative to a financing or credit transaction.  In a credit transaction, a financial institution extends funds to you or to another on your behalf, which you can then use for a purchase. If you make a purchase on credit, you borrow the money and then make payments back to the creditor, which includes finance charges such as interest. 

On the other hand, when you enter into a lease agreement with us, you agree to lease merchandise from Acima. Acima then purchases the merchandise you select from a participating retailer. We don’t extend funds to you or on your behalf. You make lease renewal payments to Acima while using the merchandise, and you can use a purchase option to own the property, or terminate the lease and return the merchandise in good condition at any time, without penalty. There is no interest, but you make lease payments based on the value of the merchandise and the cost of lease services. Acquiring ownership by leasing will cost more than the retailer's cash price. 

At Acima Leasing, we consider multiple data points in reviewing your application and we regularly approve customers who have a less-than-perfect credit history. All you need to provide in order to apply is some basic information and the following:

• An active checking account with at least $1,000 of income per month.

• Three months of income history with your current source of income

• A government-issued ID and a SSN (social security number) or TIN (Taxpayer identification number).

So yes, educate yourself on your credit score and standing, but don’t let it stop you from applying with Acima Leasing and shopping for the items you need right now. See how our lease-to-own solutions* can help put those items within reach, then start shopping at the name-brand retailers you know and love to make it happen. Still have questions about Acima Leasing? Check out our FAQ page for more about how Acima Leasing is here to help you shop for what you love.