What Is A Good Credit Score? How Do I Get One

What Is Considered A Good Credit Score?

Many individuals work hard to maintain excellent credit throughout their lifetimes. Better interest rates, more credit card possibilities, and a greater likelihood of loan acceptance are all made possible by good credit. Your score is an example of your creditworthiness and aids lenders in risk analysis. A borrower with a good credit score indicates to a lender that they are more likely to repay a loan. Lenders will see you as a risk if you often have a poor credit score.

The two biggest competitors are FICO and VantageScore, although several credit scoring systems are available. The range of VantageScore and FICO scores is 300 to 850. It is preferable if your credit score is higher.

Let’s look at everything that contributes to a good credit score and what it takes to get it.

FICO Score

A credit score between 670 to 739 is considered acceptable by FICO, while anything above 800 is deemed outstanding. Between 580 and 669, a FICO score is deemed decent, and between 740 and 799, it is deemed excellent. Anything below a 579 FICO score is considered to be bad.

VantageScore

VantageScore 3.0 and 4.0 cover the range of 300 to 850. According to this assessment, a good credit score is between 661 and 780, and an excellent credit score is between 781 and 850. Scores between 601 and 660 are acceptable, while those between 500-600 are subpar. Any score below 499 is considered to be extremely bad.

What factors impact your credit score?

Numerous variables are taken into account while calculating your credit score. Although the ranges shown here are based on the criteria of the credit reporting agencies, credit issuers may have more precise score requirements within a range to achieve their approval standards. This is because there are numerous kinds of credit scores and varied ranges.

Five credit-related elements combine to form your FICO score. They include the sums owing, the mix of credit, any recent credit, the duration of credit history, and payment history. Each of these criteria receives a percentage from FICO to decide how much weight it will have when calculating your credit score, including the following:

  • Record of payments: 35%
  • Amounts owed: 30%
  • Duration of credit history: 15%
  • New Credit: 10%
  • Credit percentage: 10%

FICO and VantageScore use the same variables to determine your credit score, but VantageScore weighs the variables differently. The most crucial aspect for VantageScore is still payment history. However, the VantageScore rankings give greater weight to your credit mix and credit history.

Why is having good credit so important?

Having high credit might provide you access to additional credit card choices. Other card options become accessible when your score rises to a reasonable level. The bulk of the most acceptable rewards cards available today demands excellent to outstanding credit.

Excellent credit also gives you access to reduced borrowing rates. The majority of credit cards have variable interest rates that might be anywhere between 12 and 24 percent.

When you take out a loan, such as a mortgage on a home or a loan for a car, the interest rate that you will pay and whether or not you will be approved for the loan are both potentially influenced by your credit score. But the implications go far beyond than that.

Credit ratings are equally significant when it comes to choices not involving financing. A landlord will examine your credit when you apply for a new apartment to determine whether or not they wish to accept you as a tenant. What better method for a landlord to decide if you are someone who pays their obligations on time than by checking someone’s credit score?

A guide on how to improve your credit score

Knowing your credit score is the first step in raising it. At AnnualCreditReport.com, start by getting a credit report. Each credit agency must provide you a free credit report once a year.You may also get your credit score directly from your credit report or via a reliable credit reporting website. Other actions you may do to raise your credit score include the following:

  • Punctually pay your expenses. Your payment history is the most crucial component of your FICO and VantageScore. Therefore you should strive never to make late payments. You may raise your credit score by consistently making prompt and complete monthly payments for your obligations. It may stay on your credit record for up to seven years if you miss a payment.
  • Maintain a fair card balance. Regardless of the model, one of the most crucial elements in calculating your credit score is your payment history and credit use. Keep your credit use at 30% or below, according to experts. The credit usage rate for those with good credit scores is often in the single digits, so keep that in mind.
  • Avoid canceling out-of-date credit accounts. Maintain open accounts and allow you to expand. Maintaining your credit history can help your history grow. Closing an account reduces your credit limit, which increases your usage and lowers your score.
  • Ensure that the credit bureaus receive a report on your accounts. If you have few credit accounts, check if they are in your credit score. If you’re an authorized user on someone’s credit card, be sure you need access. On-time utility and rent payments may easily boost your credit score. You may require Experian Boost to add these accounts to your credit history.
  • Limit credit inquiries. When you apply for new credit lines, a hard question is made on your credit report. You shouldn’t apply for several new credit cards at once, even if doing so slightly lowers your credit score. When looking for a new credit card, do extensive research and only apply for the card that will best meet your financial requirements.

Conclusion

The best way to raise your credit score is to establish and continue to use responsible credit management habits. Remember that establishing a solid credit score takes time. Paying your bills on time, keeping your credit utilization low, and avoiding making too many new credit inquiries will put you on the right path to achieving the credit score of your dreams, whether you’re trying to rebuild your credit after a few financial setbacks or simply want to raise it a few points. Or even a lender’s ideal credit score.

Most Asked Questions

Is a 700 credit score good?

A good credit score is 700 or above. Excellent credit makes you more creditworthy. You may also receive a lower interest rate.

What does a high credit score mean?

A score of 720 and 850 is considered excellent credit ratings. The most significant credit conditions are available to you even if your score is below 800.

What is A fair credit score?

A respectable credit score is between 630 and 689. Obtaining financing or the conditions you desire could be more complicated.

What is a low credit score?

Scores lower than 630 are an indication of poor credit. Make good use of the information provided to you above so that you may work toward enhancing your credit profile.

Author: Jay Batson

My Name is Jay has and I have a passion for financial writing. I am the chief writer on this blog. I do my best to verify all the information but if there is anything amiss please let me know and I will do my best to correct it.

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