What Is Good Credit Score Equifax?
What is a good credit score? This is a simple numerical value that enables the lending institutions to gauge your ability to repay the loan. The Equifax Credit Score scale used by Equifax, one of the three credit reference agencies in the United States consists of the score range 300 – 850. In this respect, any score beyond 670 can be considered good and any score beyond 740 is deemed excellent.
Okay, what factors then affect the credit score that has been defined above?
The Equifax model looks at five main categories:
Payment History This category holds the most weight, with a contribution to the Equifax Credit Score of 35 percent. It contains information on matters such as your bill payments, any payment that is due and hence possibly delayed, debts that have been reported to collection agencies, and any bankruptcy. The less your percentage of late payments, the better your payment history and in turn a good credit score.
Credit Utilization The second major component that contributes to your score is your credit utilization, which contributes to 30 percent of your score, and this is the amount of credit that you currently using. Financial advisors have suggested that you should use no more than 30 percent of your available credit. The lower the better when it comes to your score on a particular subject.
Length of Credit History Fifteen percent of the Equifax Credit Score is presumed by the average age of the credit accounts and the number of years particular credit lines have been active. In general, the more overall experience of credit you have, the higher this part of your score.
Number of Credit Inquiries Again, the remaining 10 percent is determined by the number of credit checks or ‘hard inquiries’ on your credit file. This may contain requests such as those in the application for credit cards or loans. Trying to read too many in a short space of time can bring your score down momentarily. However, multiple loan inquiries within a similar category within a particular time frame are only considered as one inquiry.
Mix of Credit As the least of the factors contributing to your score, at 10%, this evaluates the credit accounts mix you hold which includes credit cards, retail accounts, installment loans, mortgages, and the like. It also has it that you have had experience in managing revolving as well as installment credit.
Besides the above categories, correct personal information on your credit report, having a few old credit accounts active, and credit application diversification are also effective ways to affect your credit score in the future.
Advantages of Creditor’s Good Credit Rating Having a good or excellent credit score, why in the first place? There are many advantages:
Lower Interest Rates The primary advantage is attaining the best rates that are charged on loans and credit cards hence being economically beneficial in the long run. Specific details vary from one lender to another, although those with good scores can be able to access rates that are as low as 5 percentage points below the standard.
Better Terms and Rewards A high score also makes you eligible to secure better credit facilities, higher credit limits, lower charges, and even attractive reward programs. Most credit card providers have loyalty programs that lock the best offers and privileges behind the door of good credit.
Increased Buying Power This means that your credit limits can also go up or down depending on the state of your credit score. The higher scores acquired, the higher the maximum amount of credit one can be eligible for especially for crucial purchases such as auto loans and mortgages.
Easier Approvals Credit score issues are other common practices by lenders in which applications with a certain score or below are either rejected or subjected to further review. However, if one scores well then, approval is received instantly with much ease. Some landlords also use credit scores to conduct background checks on potential renters.
Top Tips to Help You Boost Your Credit Score If your credit score needs a boost, here are key tips for improving it over time:
Always ensure you pay all your bills within the credited time. This includes not just credit accounts but also utilities and other regular expenses such as rent, insurance, food, gas, clothing, and so on. In case of the need for more constant and regular payment, arrange for automatic payment or setting of payment reminders.
Lower credit utilization Reduce credit card balances to maintain credit utilization at or below 30 percent or preferably less than that. This may show the quickest positive return.
Limit hard inquiries When requesting credit, ensure that you do it when necessary and not too often as this will be detrimental to your score. Make sure you keep a close eye on your Equifax report so you can pinpoint the time when applications will slow down.
Correct credit report errors All credit report information is not always accurate and you can challenge any information on the Equifax credit report that is lowering your scores.
Build a long positive history Do not close old accounts and ensure to pay them on time so that a company can develop a good consistent credit history for many years.
Vary your credit mix For new credit, only apply when necessary, but you can try to obtain two or more installment loans or a secured credit card to show that you are capable of handling various types of credit.
One should observe fluctuations in the Equifax credit score frequently to identify issues at their early stage. Positive scoring factors should be the desired objectives of a business whenever possible. Do not expect results right away as it will take time to change long-term credit habits and to wait for a credit score to improve. That way, you can maintain a good to excellent Equifax credit score, even in periods of financial difficulties.
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