What is a good credit score? A good credit score is an attractive rate and terms that get you approved when you apply for a loan or for a good credit card. This is because the threshold for what is considered good can vary based on the type of loan or credit card you are applying for.
The betters your score, the easier you will find it to be approved for new loans or new lines of credit. A higher credit can also open the door to the lowest available interest rates when you borrow.
What is a Good Credit Score
Your credit score is an important indicator of your financial health, as well as a tool you can use to live a better life. you must have heard of the importance of good credit. Well, to take a mortgage or borrow money to buy a car, but there are others areas of your life where good credit can help.
What is a FICO Score?
Your credit scores are derived from information leaders provide to the big three credit bureaus. This includes Equifax, Experian and Trans Union. Hence, it collects your credit reports and gives a good analysis of them.
Your credit reports include your borrowing history, which is the type of account, the amount owed, payment history, and open and closed dates. Etc.
However, this information s filed into an algorithm, which makes up your FICO score. Hence, this score ranges from 300 to 850.
Why is a Good Credit Score Important?
Having a good credit score has the potential to help you in many areas and ways. It can be a required tool for renting a good home and in some cases, a good credit score may lead to lower insurance premiums. However, the biggest benefit of having a credit score is getting a loan approved without restriction.
Note, if the score is too low, you might not be able to get approved at all. For some creditors, they prefer to publish their cutoff point that your credit score needs to be above the given cutoff before you can qualify for their loan.
How to Get your Credit Score for Free
You might be able to get your score for free from your credit card issuer. However, getting a FICO score is more important than a vantage score because lenders use that score more frequently. A low credit shows lenders that you may have a history of running up debt or missing your monthly payments.
What is an Average Credit Score?
An average credit score is one that is considered Fair. This is a score that falls between a good and an excellent credit score. Most consumers have credit scores that fall between 600 and 750. The average score in the United State reached 710 an increase of seven points from the previous year.
What is a Good Vantage Score?
FICOs competitor, vantage score produces a similar score using the same report date from the three bureaus. A good vantage score lies between 661 and 780, which the company calls a “prime” credit tier. Vantage Scores above 780 are considered “super-prime” while those between 601 and 660 are “near prime”.
What a Good Credit Score Can Get you?
The need for a good credit score cannot be over-emphasized or taken as a joke. This is because whether you can borrow money and how much you will pay in interest is determined by your credit. Outside this, here is a list of benefits you can access with a good credit score:
- An unsecured credit card with a decent interest rate or even a balance transfer card.
- A good and attractive car loan or lease.
- The ability to open new credit to cover expenses in a crisis if there are no emergency funds.
- A mortgage with a favourable interest rate.
These and many more are what you would gain from having a good or excellent score.
What Affects your Credit Score?
Having knowledge of what affects your credit score is very necessary. This is because when you have this knowledge, you can be able to manage your credit score and also prevent it. However, payment history, which is whether you pay on time and credit utilization, which is how much of the credit limits you have s what affects your credit score. Here are other factors that can affect your credit:
- Available credit.
- Balances on your active credit.
- A number of accounts.
- Credit inquires.
What is a Good Credit Score According to Lenders?
Everyone has their own definition of a good credit score, banks, credit unions and even lenders have their own standard of defending a good credit score. Hence, the lenders, such as credit card issuers and mortgage providers, may set their own standards on what good credit is.
To them, good credit means they decide whether to grant you credit and at what interest rate. A good score is the one that helps you get what you need or want, whether that is access to new credit in a pinch or lower loan rates.
What Credit Score Does an 18-Year-Old Start with?
For an 18-year-old, a no score will be used for him or her. Credit scores are based on the information in major credit reports, and such reports are not created until the lender or credit Union have credit in its name for at least six months.
How Fast Can I Build Credit?
It usually takes a minimum of six months to generate your first credit score establishing good or excellent credit takes longer.