What Is A Good Credit Score
We rely more on credit in today’s society than ever before, which is why it’s vital that you maintain a good credit score. Good credit scores are more than about getting credit cards or loans; they demonstrate to lenders your ability to manage money responsibly and pay off debts on-time.
In this article, we look at what constitutes a good credit score and what steps you can take to improve yours if it’s not so hot.
Stated by a credit repair Dallas company, if you’re familiar at all with credit scores you’ve heard the term FICO score. FICO scores are created by the Fair Isaac Corporation and many lenders rely on these scores to determine whether or not to extend you credit.
FICO scores range from 300 to 850. But what is considered good credit and what is considered bad? Let’s see:
Scores in the 800-850 range are considered exceptional credit. Scores of 740-799 are deemed very good. Scores ranging from 670-730 are rated as good. Scores of 580-669 are fair, and scores of 300-579 are considered poor.
You have a poor credit score, you might have to pay a fee or deposit if you want a credit card, or you may not be approved for credit at all.
With a fair credit score, people are considered subprime borrowers and will not only have trouble getting credit, but they will also likely suffer from high-interest rates if they do get it.
Good and very good scores rate highly with lenders as these people are seen as less likely to become delinquent, while people with exceptional scores get the best rates from lenders.
VantageScore scores are also popular with lenders because they incorporate data from the three major credit reporting agencies: Equifax, Experian, and TransUnion. Like FICO, VantageScore scores range from 300-850 and come with the same advantages and disadvantages.
Why Credit Scores are Important
As mentioned, credit scores play a vital role in deterring whether a lender extends you credit. These numbers may seem arbitrary, but the lender uses them to judge the likelihood that you’ll pay your bills on time and pay your debts as agreed.
It’s important to have good credit today because many of the purchases we make require loans or credit. If you have poor credit, it’s more difficult to get a car, a home, or even a cell phone contract.
Also, having good credit determines the interest rate you’ll pay. People with bad credit often have to pay high-interest rates, which makes it more difficult to pay off debts.
How To Improve Your Score
The number one factor that goes into your credit score is your payment history. Paying bills on time every month is key to maintaining a score in the good to exceptional range. Whatever you do, make sure you make every payment on time, even if you’re only paying the minimum.
If you are late, your credit score will take a hit, but getting back on track the next month will help build your score back up. Lastly, consider getting an app or service that helps you monitor your credit score and get alerts you whenever it changes.