What is Meant by a Good Credit Score

Benefits Of A Good Credit Score

A credit score of 700 or more entitles you to get the loans you apply for at the best prevailing rates of interest. However, in case your credit score happens to be marginally less than 700, you are likely to be approved the same loan but at a higher rate of interest; and with a still lower credit score you are likely to be asked to pay a still higher rate of interest.

In this scenario, it is seen that your credit score influences the interest you will pay on a loan for your college tuition, purchase of a new car, a new house or even on some major renovations to your home. Since even a small change in the rate of interest results in a very big difference in the total payable, such is the importance and significance of a favorable credit score.

What Are Credit Score Ranges?

A credit score generally ranges between 340 to 850 which is computed statistically by the credit reporting agencies also called credit bureaus based on several factors in your credit record comprising of for how long you have had a credit history, total debt outstanding, types of credits used, new credits, late and missed payments and also including foreclosures, liens, bankruptcies etc. in special cases.  

Credit Score Of 700

A good credit score is 700 and above when your chances of receiving credit from lending institutions is high in comparison to another having a credit score below seven hundred. Approximately 60% of Americans fall into the former group which means 40% of Americans still need to improve on their credit scores to be eligible to get high ranking loans like housing loans and vehicle loans from lending organizations at best current rates of interest. The 40% Americans with low credit scores or others in the same boat are not doomed. The good news is that you can always improve your credit score with determination and a willingness to sacrifice certain present pleasures for a better tomorrow.

Steps To Improving FICO Credit Score

The first step in improving your credit score should be the reduction of the outstanding debt with special emphasis on the creditors on credit cards. Since your resources may be limited to pay all bills outstanding in credit cards, start paying off the creditors from your highest interest bearing credit card and follow the same pattern for the rest of the credit cards until all credit card debts are settled. 

If you encounter a tight situation with regard to your finances, make an arrangement with your major creditor to give you a short term “amnesty” period until you improve your credit score, by taking off any payments due from you during this interim period from the official records so that any possible late payments to them may not appear in the credit report.

Keeping too many credit cards is one of the major causes behind bad credit scores of many potential borrowers. You can pay off all your credit card creditors, and even stop operating most of your credit cards except for two. But there is a point for not canceling them since carrying debts with zero balances is good for your credit score.

If you are already having a favorable credit score, don’t commit the common mistake of opening new accounts when you are having a credit history of less than three years, since it would go against you in your credit record.

Credit Report Errors

Sometimes your sixth sense may tell you that some errors appear to be behind the poor performance of your credit score. Then, you should surely obtain a copy of your credit record score from one of the credit bureaus and check it thoroughly for mistakes. If you find any, report back immediately to the same credit-reporting agency and send all the documentary evidence to back your claim. They will launch an investigation into this matter and if the creditor concerned does not contest your claim, then you can get those entries corrected when your credit score should automatically improve.

Where Can I Calculate And Obtain My Credit Score?

With diversity of transactions form one year to another, there could be corresponding fluctuation in your credit scores too. Therefore, make it a point to obtain your credit scores from all three credit agencies, namely Equifax, Emperian and TransUnion and compare your credit standing in each of them.  This will enable you to always observe with the least possible delay, the ups and downs of your recent credit transactions and how they have affected your credit score; so as to take immediate remedial action to maintain a consistently good credit score.  Should you need any further assistance with regard to good advice and sound management of your credit and finance, consult a financial advisor.