What is a Good Credit Score?

The answer to this question everything depends on your lender and the way they rate and determine what is a good credit score. It’s highly recommended that you speak to your lender and discuss this question; however we can make general assumptions here, when we consider standard FICO scores, which go up till 850:

  • 750 or higher: this tends to be an excellent credit score. With a 770 credit score, you can obtain the best credit loan rates possible.
  • Between 700 and 750: 725 is an average credit score in the United States. The credit scores here range between excellent to good credit score.
  • Between 700 and 650: considered to be a very good credit score. Again, the score varies in different industries.
  • Between 650 and 600: just a good credit score. Often the minimum for a good credit score is established at 620 since this is the cutoff for the prime credit loan rates.
  • Below 600: this seems to be a high lending risk for lenders. Although you still can obtain loans and credit cards, they all will be secured.
  • Below 550: considers to be an awful credit score – bankruptcies, past-due accountants and so on.

How to Achieve a Perfect Credit Score

The ultimate goal as you might already know is to reach a credit score of 800 or above. Here is a collection of some useful tips, which show you exactly how to go about it:

  • Don’t make late payments: late payments can effect you for up to 24 months or even longer.
  • Avoid bankruptcies: they are very difficult to remove and most of the time stay for up to 10 years.
  • Have as little credit cards as possible: although diversity of credit is essential for the perfect credit score, having too many credit cards effects your credit score negatively.
  • Keep credit card balance to 15% or less: very important – it has been established that balances at 15% or below are ideal for the perfect credit score.
  • Have a mortgage: it has been proven that stability and long term credit history, which is associated with mortgage, is very important for your perfect credit score.
  • Grow old: it has been well documented that age helps with credit score ratings.  It’s just about impossible to reach a perfect credit score of 850 without being in your mid fourties or above.

Factors Affecting Your Credit Score

As you become older and older, you realize that credit score is one of the most important numbers, which affects your financial life. The more you know about credit scores, the easier it will be for you to have a healthy financial life and thus more opportunities to have loans with the prime rates. The following factors play a major role on your credit score:

  • Repayment history: this factors carries the most weight on your credit score. Experts in the industry say that this factor alone accounts for the 35% of your credit score.
  • Outstanding debt: the next in line comes in your debt. This factor plays 30% of your credit score.
  • Length of the credit history: the longer your credit history is, the better it is. This factor weights about 15%.
  • State of the accounts: the amount of money, you have in your account. This factor is about 10% of the total credit score.
  • Different credit types: the types of loans you have taken out, have an affect on your credit score as well. Whatever it is a secure, unsecured loan or just debt consolidation matter. Finally, the factor has another 10% of the credit score.

How to Increase Your Credit Score

Raise your credit score now! This way you can save thousands of dollars on your mortgage payments. Here are some ways to do it right:

  • Check credit score reports for errors: if there are any errors, which have negative impacts on your credit score, contact credit reporting agency immediately. The agency should investigate and correct any errors within thirty days.
  • Pay off balances every single month: it’s just good for your future to keep yourself out of a huge amount of debt. It saves a lot of interest as well.
  • Pay the bills on time: paying bills on time has the biggest affect on your credit score!
  • Manage the credit card balances: it’s the best to have a credit card balance, which is less than 50% of its limit.
  • Keep and cancel the right credit cards: old accounts are better off than the new ones. Keep those accounts open even if they have zero dollars in them.
  • Carefully select the lenders: if you can’t pay cash it’s much better to borrow the money from a bank or a credit union.

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