Your credit score is a very important information regarding your current financial health. That is because it is a way of indicating whether you are a person who has good control over your own money and pays your debts on time or not.
Banking companies and lenders analyze your credit score before offering a service, and may change the amount, limit and interest rates involved, giving more or less benefits.
But what exactly is a good credit score? The subject is more complex than it seems and we will explain everything in this post.
What is the Credit Score Scale?
For those who still don’t know, the credit score is a number that ranges from 300 to 850 and it indicates how likely you are to pay off your debts and loans.
This number is calculated based on your credit account history. All the information is collected by credit bureaus, which store all your financial data. The three largest credit bureaus in the country are TransUnion, Equifax and Experian.
Credit score ranges
Each lender and bank company can set their own scoring standard, but generally speaking, we find the following score classifications:
- > 720: considered an excellent credit score.
- Score between 690 and 719 is considered good credit.
- Scores between 630 and 689: are fair credit.
- < 629: is a bad credit score.
Other factors such as debts and annual income can influence lenders’ decision to approve or not your applications, but having a good credit score is undoubtedly very important.
While a credit score of 620 to 700 is considered a good score, you will still be offered the best terms and benefits for negotiations. Unfortunately, a score lower than 629 is already considered bad.
In practice, having a good credit score means good interest rates, bonuses, rewards, and the ability to qualify for a higher lease.
The factor that can affect you credit score includes
These factors include:
- Payment history
- Using your credit limits
- Balances on your active credit
- Credit inquiries
- Available credit
- Number of accounts
How to Improve Your Credit Score
If after reading all this you got curious, went to check your score and weren’t happy with what you saw, know that there is still hope!
There are many ways to boost your credit score and build a good financial reputation. If you have no idea how to do it, follow the tips below and try to put them into practice right away.
All of them can help you in this situation and you will achieve an excellent credit score, so write them all down:
- Get a safe and good credit card.
- Track and analyze all your mistakes and overspending on your credit report.
- Keep your credit payments up to date.
- Keep your credit card balances to a minimum.
- Avoid increasing your credit by purchasing new cards.
- Be smart and disciplined in your accounts.
- Remember the importance of achieving a good credit score.
With all that said, you can see that several factors can affect your credit score and it’s important that you pay attention to all of them to maintain a good score.
If you’re trying to pay off all your credit card debt to improve your credit score and earn lower fees and other benefits, be patient and stay on track as you reorganize yourself financially.
So you will be able to pay your debts quickly and improve your financial life.
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