What Range Is A Good Credit Score?

It is important to understand what a good credit score is and why it is relevant. A credit score is a numerical value between 300 and 850, that helps a creditor to assess the creditworthiness of a borrower. There are various credit scores but the prevalent ones that lenders mostly consider are between 300 and 850. In general, the higher the score, the better, although it is possible that in some cases the level of achievement may be too high. However, the definition of what is considered a good credit score is relative and depends on every individual.

Measuring credit scores is in a manner that a decent credit score usually falls between 670 and 739. Should yours fit this range or above, you will be qualified for financing at acceptable rates. Should your score be over 750, you might be eligible for prime rates. Should your score be less than 670, you might find it challenging to get credit and could have to pay more interest.

Realizing Why Credit Score Matters It finds the credit cards and loans you qualify for as well as the terms and rates applicable to these items.

Specifically:

• Mortgages – Credit Score, The better your credit score, the better your chances of being approved for a mortgage. And, you will be in a position to get more competitive mortgage rates if your rating is over 740 or so. Every company has different requirements but in general, you will require a credit score of at least 620 to secure a conventional home loan.
• Auto Loans – Here, borrowers with credit scores between 700 and above will secure the best auto loan interest rates generally. Boys and girls with the scores of 600s will pay a higher interest rate but they will still be able to be approved.
• Credit Cards – The primary credit cards with better interest and cash-back policies favor applicants with very good to excellent credit (720 and above). There is still the possibility of getting approval for the purchase of minimum quantity essential cards with fair credit (with a score of around 640), but the interest rates are very high.
• Personal loans – The best personal loan rates should be attainable for people with FICO scores of 670 or higher. However, it is important to note that both the applicants with fair and poor credit ratings can still apply for the loan but they will be charged a higher interest on their loans.
• In other words, maintaining a credit score of 700 plus is all that guarantees one availability of the biggest number of loans and credit products at the lowest possible rates. Consequently, when the score dips to 650 and below, approvals become a thing of the past.

They want to know what affects the credit score: It is important to note that several criteria determine the credit score. 

But these five categories account for the majority of your score:

1. Payment History – Whether the accounts previously credited were paid on time or there were delinquencies. Habits related to credit repayments are usually the largest ones and they range from 25% to 35% in the case of FICO credit scores.
2. Credit Utilization – the amount of credit available to cardholders and how much of this facility has been utilized. Ideally, try to aim for this to be less than 30%. It is in light of this that high credit utilization indicates credit risk thus the need for drawing up a credit risk model to help in the identification of credit risky customers.
3. Length of Credit History – even though there is no specific length of credit history that is considered optimum, it is in general preferable when you have been using credit for a longer time. When calculating averages from the accounts you’ve been holding for a long time, it paints a good picture.
4. Distribution of credit – this shows the number of credit card accounts, installment credit, moving credit, and mortgages, having all of them may slightly improve the scores.
5. New Credit – opening many new accounts in a short time can be bad for the score especially if credit checks accumulate and overall utilization increases. Do not participate in multiple credit applications for new credit and credit cards at the same time.

In most cases, an individual cannot boost their credit score by a few points in one day. Make at least the minimum payment on all the credit accounts each month, maintain a low credit utilization ratio on credit cards, limit credit applications, and be persistent. If one is financially wise in his or her spending throughout the years, then the score should rise appropriately. You can also improve your score by doing a credit report review for the removal of any errors on your reports.

Who decides what is good credit as opposed to bad credit While credit scoring models vary, here is a general breakdown of different credit tier categories:

• Good Credit – All FICO scores starting from 700, 720, and 740 up to 799 are regarded as good. Fewer than one percent of consumers who have credit scores can be classified as having this characteristic. You will be offered the most competitive rates.
• Good credit – A credit score of 740 to 799 is also known as very good credit. Approximately 15% come here in this category. They still receive very good loan terms and rates for this group.
• Fair Credit – It is recognized that credit scores between 670 and 739 are good and are therefore categorized under fair credit. It should be possible to get approved and get reasonably good rates. Contributes roughly a fourth of scorers.
• The next category is Fair Credit – this covers all the scores that will be in the range of 580 to 669. You can still get approved but at the cost of enjoying higher interest rates as compared to a standard loan. 20% of the sample has fair credit.
• Poor Credit – If a person has credit scores below 580, it means that he has had serious credit problems in the past. Will so, getting approved for one, or paying incredibly high interest rates will be a challenge. Unfortunately, in the ranking here people rank at around 30 percent.
• Poor credit history – Below 500 or less on the credit score is synonymous with bad credit, which drastically decreases the chances of being approved by any other lenders apart from subprime lenders usually at incredibly high fees. They indicate the most seriously overdue debts.

Changing Time and Habits to Increase Your Credit Score No matter where you currently fall on the score spectrum, improving your credit score is achievable over time through prudent financial habits:

• It is best to pay all credit accounts punctually at all times. Once you are 30 days past due, your score can reflect those payments. Use payment reminders if necessary, to emphasize the fact that one has to pay their debts.
• Charge-off rates for accounts that as of the month-end balance are above 30% of the limit, the lower the better. This is the extreme where high utilization can have the effect of lowering a score.
• Do not open multiple credit accounts merely. Get and open a new credit account only when necessary. New accounts and credit checks can hurt for a short period and therefore decrease the score.
• Get your credit report on AnnualCreditReport. Com and challenge any large negative items that might be pulling down your score. This means that eradicating some errors on the paper can potentially increase your score.
• Visit a site, such as Credit.com or Creditkarma.com, and put your signature up for free credit checking. This maps your score and notifies you of any factor that might affect it. Another benefit of monitoring is that it also assists in identifying cases of identity theft.

The above habits will help your credit score to start recovering or improve in case of a decline after a few years. Although patience is the key, it is not passive if one is active in managing their credit scores then sustaining good credit scores in the long run is much easier.

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