Credit Score: What’s a Good Credit Score and How to get it?
Different lenders have their own standards for rating Credit Score but generally, 700 and higher (on a scale of 300 to 850) is generally considered good. A score of 800 or above on the same range is considered to be excellent. Most credit scores fall between 600 and 750.
Credit scores are used by lenders, including banks providing mortgage loans, credit card companies, and even car dealerships financing auto purchases, to make decisions about whether or not to offer your credit (such as a credit card or loan) and what the terms of the offer (such as the interest rate or down payment) will be. Good credit habits, practiced consistently, build toward a good credit score.
Higher scores represent better credit decisions and can make creditors more confident that you will repay your future debts as agreed. A good credit score helps in other ways. In many states, people with higher credit scores pay less for car insurance and some landlords use credit scores to screen tenants. Employers may also look at your credit standing (looking at credit reports, though, rather than scores) as part of the hiring process.
Good credit score: Benefits
It is important to have a good credit score because it determines whether you can borrow money and how much you’ll pay in interest to do so.
Among the things a good credit score can help you get:
- An unsecured credit card with a decent interest rate, or even a balance-transfer card.
- A desirable car loan or lease and a mortgage.
Good Credit Score: How to get
- It is important to Pay bills on time, every time because payment history has the largest impact of all the factors in your score.
- Avoid making several credit Applications in a short time frame.
- Monitor your credit reports and dispute information you believe is incorrect or too old to be included (most negative information falls off after seven years)
- Keep your credit card balances well below your credit limits. Don’t go higher than 30%, and lower is better. This factor, called credit utilization, has the biggest influence on your score.
- Keep credit accounts open unless there is a compelling reason, such as high fees or poor service, to close them.
- Keeping older accounts open helps your average age of accounts, which is a secondary influence on your score. Also, closing an account cuts into your overall credit limit, driving up your credit utilization.