What Score Is Considered Good Credit?

Introduction The credit score is probably one of the most influential figures that determine your financial capabilities. It gives a brief description of your credit history and informs the lenders of your creditworthiness, that is, how risky or safe you are in repaying your loans. A good credit score can assist you in getting the most favorable loan deals with relatively low interest rates while a bad score can leave you struggling to even get approved for any loan and if at all, the interest rates are relatively high. Thus, what is also known as a good credit score that will convince lenders to borrow your money?

A good credit score is referred to as the consumer’s FICO score, which ranges from 300 to 850. The credit scores differ across the United States and they start from 300 and go up to 850. This range goes a long way in explaining the variations between the high-risk and low-risk borrowers to the lenders. As a rule, a FICO credit score above 700 is good and if it is higher than 750 this is considered to be very good. The higher the numerical value which you are likely to be scored, the better the interest rates and other loan aspects which you can be eligible for. However, keeping credit strong requires effort and that is necessary to fulfill important financial objectives.

The higher the score is, the better the credit rating, thus, scores above 720 are considered to be good scores. According to the different lenders, any rating that is above 720 is usually regarded as good. Borrowers in this bracket are often qualified to receive loans and credit cards at standard to low interest rates. If your score is above 720, you are perceived to pay your bills on time, not exceed your credit limits, and limit the amount of debt you have about your income. When it comes to your credit behaviors, lenders regard you as a stable client if you remain that way. If you maintain a score of 720 or above, most standard consumer loan agencies should be willing to offer you affordable rates on your home loans, car loans, and credit cards.

An average credit of between 670 and 719 means that one is in the middle of a good and bad credit score rating. A credit score in the range of 670 to 719 is also good for approval for many loans, although the interest rates offered by some of the lenders will be higher. Subprime borrowers in this score range have both positive credit characteristics and negative ones. For instance, one may perform credit card payments promptly but at the same time, have higher card balances regularly. Or you may have been paying auto loans or student loans and you will have been successful in paying them even though you have a limited borrowing record. Your lenders are still willing to accept the risk of lending you money but they are not willing to offer you their best terms because there are errors in your credit profile.

The general credit score below 669 is considered to be a poor score. A score below 670 is considered to be within the poor credit range. The further a score gets below this reference level, the more expensive credit becomes. As credit scores drop lower than 670, interest rates on loans go up dramatically. Individuals with scores in the range of 600 and below or even slightly above are on most occasions unable to access prime rate financing from traditional banking institutions. While some companies that offer subprime loans to those with bad credit scores may approve the loan request, they will likely do so at extremely inflated rates. If an applicant has a history of missed payments, collection accounts, debts in collection, tax liens, foreclosures, and bankruptcies his or her credit scores will be low. And if your credit score is below 670 then you should follow a few more tips on how to raise your credit score before applying for major loans.

Credit Scores and their Influence on the Credit Granting Process This means that your credit score can change with a few points, which may either lead to approval of the loan or disapproval or affect the interest rates of the loan.

Here are some examples across credit products:

Mortgages: Borrowers who score above 740 are usually able to access low down payment loans, which are reserved for prime credit tier borrowers. Larger loan amounts are required from less capable borrowers, which results in lower scores that mean more cash down and higher interest rates. Recent figures reported that the average rate of a 30-year fixed mortgage for those with a credit score of 740 and above is 4. 3%. Individuals and families with credit scores that ranged between 620-639 paid slightly higher rates of 7. 2% which was about 3 percentage points higher.

Auto Loans: New car loans are often cheaper and good credit score holders often afford to borrow at less than 3% APR. Individuals in the average credit range of 690 can be charged more than 7 percent interest. Subprime auto loans can have interest rates of as high as 15-20% annual percentage rate on those with very low credit scores under 550. When getting $30,000 to buy an auto, the interest rate PA differs, and having bad credit means paying over $5,000 more in interest.

Credit Cards: Credit card companies provide the best rewards credit card promotions to borrowers who have good credit ratings and free 0% introductory interest rates. Those with good 740+ credit scores are allowed to join the golden list of cards with massive sign up bonuses. This means that if you have an assign-credit rating, poor or average, you may only be approved to receive high annual fee cards with no rewards. Interest rates also go up to levels above the 25% APR as compared to a 15% APR for those with good credit scores.

Improving Your Credit Score No matter your current score, it's possible to improve it over time by developing consistently responsible credit habits:

• Ensure that all loans and credit card balances are paid promptly every month.
• Generally maintain low balances on credit cards below 30 % utilization of card limit.
• Do not pay bills that you allow to be forwarded to the debt collection agencies.
• It is also advisable to limit the number of credit applications that one submits within a given period.
• Maintain the existing accounts by keeping them active and avoiding the closing of credit cards.

However, if you do not have credit problems, then you should just continue on the good path. If you have average or poor credit scores it is high time to change this and improve. That means a year or two where you’re disciplined about your credit can result in loan terms that save you thousands of dollars over your lifetime. Some of the big outcomes that you achieve at a later date start from small actions that you are likely to undertake at a certain point in the day.

Conclusion Credit scores that are above 700 are considered as good while credit scores 750 or above are considered as excellent. It is considered that when you have 720 and above, you are placed in a good position to gain a cheap mortgage, cheap APR car loans, cheap prime credit cards, and other forms of financing at cheap costs. To build good credit, you should ensure that all bills are paid on time, maintain low balances on credit cards, ensure that there are no late payments and it is advisable to avoid applying for credit. Improving your score by 100+ points is achievable within a few years if you dedicate efforts to managing your credit well today.

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