What is a Good Credit Score?
- The information in your credit reports is used to determine your credit score.
- In general, credit scores vary from 300 to 850.
- When it comes to issuing loans, different lenders have different requirements.
We get this question all the time, and the best way to address it is to start with the basics: What exactly is a credit score?
A credit score is a three-digit figure that ranges from 300 to 850 in general. Your credit score is based on information in your credit report, such as your payment history, the amount of debt you owe, and the length of time you’ve had credit.
There are numerous different credit scoring algorithms, and some of them incorporate data from other sources to calculate credit ratings. Potential lenders and creditors, such as banks, credit card companies, and auto dealerships, consider credit scores as one element in choosing whether or not to grant you credit, such as a loan or credit card. It’s one of several factors they use to evaluate how likely you are to repay money you’ve borrowed.
It’s vital to note that everyone’s financial and credit status is unique, and there is no “magic number” that would ensure better loan rates and terms.
Credit scores between 580 and 669 are regarded fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and above are considered outstanding, depending on the credit scoring methodology. Higher credit scores indicate that you have a history of good credit conduct, which may give potential lenders and creditors greater confidence when considering a loan request.
Lenders consider customers with credit scores of 670 and higher to be acceptable or low-risk. Those with credit scores ranging from 580 to 669 are considered “subprime borrowers,” which means they may have a harder time qualifying for better loan arrangements. Those with lower scores – less than 580 – are considered to have “poor” credit and may have trouble obtaining credit or qualifying for improved loan conditions.
When it comes to issuing credit, various lenders have different criteria, which may include information such as your income or other variables. As a result, the credit ratings they accept may differ based on those factors.
Because not all creditors and lenders report to all three main credit agencies (Equifax, Experian, and TransUnion), credit scores may fluctuate. Many creditors report to all three, but you could have a creditor who only reports to one, two, or none at all. Furthermore, there are a variety of scoring models accessible, and those scoring models may change based on the kind of loan and the preference of lenders for specific criteria.
What Influences Your Credit Score?
Here are some tried-and-true credit behaviors to remember when you start to build – or maintain – appropriate credit habits:
- Always pay your payments on time. This isn’t limited to credit cards; late or missed payments on other accounts, such as cell phones, may be reported to credit agencies, affecting your credit score. If you’re experiencing difficulties paying a debt, get in touch with your lender right away. Even if you’re disputing a charge, don’t miss payments.
- Pay off your debts as soon as possible.
- Maintain a credit card balance that is substantially below the credit card limit. Your credit score may be impacted if you have a greater balance than your credit limit.
- Apply for financing only when absolutely need. Applying for several credit accounts in a short period of time might have a negative influence on your credit score.
- Keep an eye on your credit reports on a frequent basis. Request a free copy of your credit report and review it to ensure that your personal information is right and that no account information is incorrect or incomplete. By visiting http://www.annualcreditreport.com, you may get a free copy of your credit reports from each of the three major credit agencies every 12 months. You may keep track of your reports all year long by obtaining a copy from one every four months. It’s important to remember that reviewing your personal credit report or credit score has no bearing on your credit ratings.
You may also sign up for a free Equifax credit report by creating a myEquifax account. In addition, you may enroll in Equifax Core CreditTM for a free monthly Equifax credit report and a free monthly VantageScore® 3.0 credit score based on Equifax data by clicking “Get my free credit score” on your myEquifax dashboard. A Vantage Score is one of several credit scores available.
Contact the lender or creditor if you uncover information that you feel is incorrect or incomplete. You can also dispute the report with the credit bureau that provided it. To submit a dispute with Equifax, you must first create a myEquifax account. Other options to submit a disagreement may be found on our dispute page.
Why should I check my credit score for free?
- Examining your credit scores and reports might help you have a better understanding of your current financial situation.
- Potential lenders and creditors consider your credit score while choosing whether or not to extend you credit, such as a loan or a credit card.
- Your credit scores and reports will not be affected if you check them yourself.
Click below Get Started to Check Your Credit Score.