What is a good credit score, and what affects your credit score? If you have been wondering what a good credit score is, you can read through this write-up to get insight on what good credit is all about, what affects your credit score, and a lot more.
As you know, credit scores range from 300 to 850. And it can be regarded as a numerical rating or ranking that measures a person’s ability to repay a debt. A good credit score, therefore, stands out to be one with a rating of 690 to 719. Anything below 690 can be ranked as either a fair or bad credit score.
With a good credit score, you can easily get approved for attractive rates and terms whenever you wish to apply for loans in times of emergency. In other words, with a good credit rating, you can quickly get loans compared to a person with a fair or bad credit rating. However, what is considered good credit can vary based on the type of loan you wish to apply for and the lender reviewing your details.
Generally, lenders don’t reveal their credit scores ranking to the public. But FICO, which is one of the most widely used credit scoring models, shares helpful tips borrowers can use as a guide. Its most common score feature is a scale of 300 to 850. Using this scale, 670–739 is considered to have generally good credit.
Why is a Good Credit Score Important?
As stated above, having a good credit score is very important, as this will help you get financial assistance from lenders with ease. As you know, it is difficult to get a loan once you have a bad credit history. You will be denied loans or there will be a delay in transferring or receiving funds when you need a home mortgage or car loan.
However, with a good credit history, you can get access to loans with ease. It will also impact the interest or fee you will pay if you are approved. Most employers do review your credit report before considering your job application. In most countries, insurance companies may use your credit history to determine your premiums for auto, life, and home insurance. In conclusion, a good credit rating is very important.
What is Considered a Good Credit?
Credit score rankings differ depending on the credit scoring model. Research has shown that credit scores ranking between 580 and 699 are considered fair. A good credit score range is from 670 to 739. As stated previously, FICO is one of the best and most widely used credit scoring companies. According to the company, good credit ranks from 670 to 739.
Factors That Affect Your Credit Score
Meanwhile, a variety of factors can impact your credit scores, ranging from payment history to credit usage to account type, and much more. You can check out the detail below;
- Payment History: Missing payments can affect your credit history badly. But making on time payment on your credit account will help improve your score.
- Credit Usage: The balance on your account and how much you owe and the portion of your credit limit can affect your creditworthiness.
- Length of Credit History: Having a longer credit history is better. But with a new Credit Account you might not be able to apply for loans or have a good Credit ranking.
Aside from the factors listed, other factors that can affect your creditworthiness include total balances and debt, types of accounts, and more.
How to Get a Good Credit Score
Getting a good credit score is quite easy. Below are some best ways to build a good credit;
- Make sure to Pay your bills in time
- Try keeping your credit Card Balances below your Credit Limit
- Avoid several Credit Applications within a Short time frame
- Track and Monitor your Credit report
- Keep your Credit Account open
Following the above instructions, you will be able to get a Good Credit rating with ease. However, out of the above-listed instructions. You need to always consider tracking and monitoring your account as this will enable you to know if you’re making progress or not.