What is a Good Credit Score?

When looking into the question above, one must look at several factors. A credit score is a number that estimates one’s level of future credit risk. With a higher score, the credit risk is lower. The opposite is also true. With a lower score, the credit risk is higher. Many lenders have varying scoring systems that are used to depict what good is. The credit number that is assigned to each individual helps those who are extending a loan to them. Decisions can be made concerning the amount of money to offer a person and the interest rate that individual will be given.

The credit score range varies from 300-850. A score is made up of several different considerations. Thirty-five percent is payment history. Thirty percent is amount owed. Fifteen percent is the length of time of the credit history. Ten percent is new credit information. And finally, ten percent of the number is types of credit in use.

There are three main credit reporting agencies. These company names are Equifax, Experian, and TransUnion. Credit reports are readily available for perusal from these companies. It is standard for one to be able, free of charge, to review the report once a year. One can obtain three free reports, one from each of the bureaus listed above. Errors in payment histories, including late payments and amounts owed, among other mistakes, may be found. The recipient of the report can also detect identity theft if it has occurred.

Generally, a score of 700 or above is considered very well to excellent. There are advantages of having high credit numbers. A high score will enable one to obtain better credit offers with the lowest interest rates available. Another advantage of keeping your score number high is to speed up the credit approval process.

The following list is advantageous to view as a means of summarizing most lenders’ perceptions of credit risk:

760 or above is excellent, 700 to 759 is very good, 680 to 699 is good, 620 to 679 is okay, 580 to 619 is fair, and 300 to 579 is considered poor.

It is a good idea to check your credit score prior to applying for a large loan. Approximately 6 to 12 months before applying, one can check their report, verifying the information and taking steps to make any corrections needed if errors were found. When applying for a loan, one can mention any unresolved mistakes on the report to the lender for their understanding.

Actions can be taken to improve the score. A person can improve their score over time by paying bills on time and reducing outstanding balances by paying these down gradually. Also, no new debt is advised.

In conclusion, a good credit score can be obtained by keeping the following tips in mind:

If one has financial difficulties and cannot make a payment, they need to talk with their creditors and see a credit counselor. Creditors will often propose an easier revised payment plan.

Low balances on credit cards increase the score.

Old accounts do not need to be closed in trying to raise the score. If accounts are closed, the late payments on the accounts will still be seen on the report.

Lengthy credit histories are desirable, preferably five to seven or more years of loans.

With conscientious, responsible decision-making, a good credit score range is achievable over time.