The credit scoring system we know today is still relatively new, and we are FICO in 1989. Therefore, it may be difficult to believe that a system of the same age as Taylor Swift can have a major impact on your financial life. If you want to get a home mortgage, you’ll need a lender to help expand your credit line if you want to pay a student loan to the university or charge a lunch with a credit card. And having a good credit means you pay less to borrow money over time.
Before you can enjoy the benefits of good credit, you must first prove that you can trust in managing your credit line responsibly. Do lenders and credit reporting agencies quantify it with a three-digit score known as your creditworthiness? Credit score. A good credit is the make-up or break details that determine whether to get a mortgage, car loan or student loan. On the other hand, poor credit can make it difficult to get a credit card at low interest rates and cost money to borrow money for any purpose.
Why is good trust important?
You may not be looking for a loan anytime soon, but having good credit still affects other aspects of your life. Depending on the state, landlords and employers can use their credit information (usually agree) as a Litmus test to see if they are dealing with trustworthy managers. Insurers use their credit score to determine their creditworthiness. Bad credit can suggest that you are a risky bet.
Credit technically only provides details on how you handle debt, but some companies apply characteristics from your financial life to other situations. Good trust It can mean that your financial situation and the rest of your life are on the right track. This means that your credit score can affect your premiums and perhaps affect the apartment you are approved for. Additionally, if you do not live in a state that prohibits the use of credit information in your employment decisions, it may affect whether you will get that new job.
But what is a good credit score? Understanding why good credit is important and how to build a great credit score can help you take advantage of its benefits. Take a closer look at what you need to get a score within the “good credit” range.
What is a good credit score?
What is considered a good credit score? According to FICO Credit Scoring Model,Credit scores are divided into five different categories.
The excellent credit score range includes all FICO credit scores between 670 and 739. However, many consider “good credits” that include FICO scores above 670. Excellent credits or Perfect creditby default there is good trust.
If your FICO credit score is above 670, not only is your credit better, you have also moved your credit from the “Subprime” category to the “Prime” category. Those who are trustworthy are Main interest rates– This means you have less interest on your credit cards, mortgages and loans compared to fair people. Bad trust.
Benefits of a good credit score
You can enjoy many benefits of gaining good credit. You will pay less to borrow money. The landlord is likely to rent an apartment for you, which may even affect the employment process in the job seeker hunt. But the biggest advantage of good credit is economics. Below are five ways that good credits can make your life more enjoyable and more affordable.
Better housing options
If you have good credibility, there are fewer, generally lower quality housing options, especially if you need to rent. Landlords usually perform your credit (with permission) to determine if you are eligible to borrow from them. Plus, your credit score often helps you how much security deposit you need to put in before you move in.
With credit, you can choose an apartment with low security deposits as long as you meet your income requirements. You may even be able to earn monthly rewards Pay rent with a credit card. But if you’re there Rental with poor trust There is no same option. To secure an apartment, you may have to resort to working with your property management company with private property or finding a rental company that doesn’t check your credit.
Pay less than borrowing
One of the biggest benefits of gaining good credit is that it saves money over time. Credit scores affect how much you pay to borrow money from a lender, so people with poor or fair credit usually pay more for car loans, credit cards, mortgages, and other forms of borrowing. For example, if you get a 60-month new car loan for $25,000, your 500 credit score is much higher than your 720 credit score. Myfico Loan Savings Calculator.
| 500 Credit Score | 720 Credit Score | |
| interest rate | 16.87% | 6.76% |
| Monthly payment | $620 | $492 |
| Total interest paid | $12,173 | $4,531 |
A 500 credit score means you’ll pay about $7,000 more for the same loan compared to someone with a 700 credit score.
Easier credit approval
If you have good credit, your bank and lender are more likely to approve your credit application. This means that when you apply for a top credit card, loan, or some of your mortgage, you It’s likely to be accepted It also takes less time to wait to hear the results of your application.
Low interest rates
In addition to having a higher credit approval rate, trustworthy people are often offered Low interest rates. Less debt payments can save you a lot of money over time. So building a credit score is one of the smartest financial moves you can make.
Better loan terms
People with good credit are often given better loan terms than people with bad credit. You may receive a Higher credit limits For example, credit cards may allow you to take advantage of a low fixed-rate mortgage.
How to get a good credit score
If you need a good credit score, you need to understand How to calculate your credit score How to build credits.
Your FICO Credit Score consists of five factors:
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Payment history: 35%
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Credit usage: 30%
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Credit History Length: 15%
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Credit Mix: 10%
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Recent Credit Inquiries: 10%
If you want to guide your credit score to a good range of credit scores, you need to improve your credit habits associated with these five factors.
Payment history
Payment history accounts for 35% of your credit score, so make sure you make all your payments on time each time. for example, No credit card payments In particular, if you don’t make up for missed payments as quickly as possible, it can have a serious negative impact on your credit score.
Credit use
your Credit usage rate This reflects how much of the available credits you currently use. If you need good credit, keep credit usage below 30% of available credits. For example, if your available credit is $10,000, make sure your total credit card balance does not exceed $3,000. If your credit card balance is above 30%, please repay it as soon as possible. This way, these high balances will result in fewer opportunities to lower your credit score.
Credit history length
Lenders want to ensure they can manage their credit accounts responsibly for a long period of time. This is why a Bad thoughts about closing old credit cardsEven if you don’t use them anymore. Credit Reports track only active credit accounts, and shorten your credit history when you shut down the oldest credit account. If you want to build good credit, leave your credit card open.
Credit Mix
The different types of credit accounts under your name will become accounts for 10% of your credit score. If there are both Revolving credits (Like a credit card) Installment Credit (Mortgages, car loans, etc.), your credit score can increase by a few points. However, even if you only have a credit card, you can still build and maintain your credit score. So don’t worry if you don’t have much credit mix yet.
Recent Credit Inquiries
Each time you apply for a new credit line, your bank or lender will conduct a survey of your credit history. Too many Recent Credit Inquiries With an account, applying for many new credits at once is a dangerous financial action, which can negatively affect your credit score. If you’re trying to build good credits, try Wait 3-6 months Between credit card applications.
That’s a good idea too Check your credit score Monitor your credit report regularly. Millions of Americans have errors in their credit reports, and these errors can incorrectly hurt your credit score. So take a closer look at your Equifax, Experian and Transunion credit reports I dispute the mistake I found.
How to maintain a great credit score
Building a great credit score is a start, but maintaining it will help you continue to take advantage of the benefits of good credits. How do you maintain good trust?
Essentially, you continue to practice responsible credit habits that will help you earn your good credit score in the first place. I always pay all my invoices on time. Keep your credit usage low by using less than 30% of your available credits. Do not close your old credit account. Instead, use your old credit card as proof of long-term, responsible credit history.
Keeping your credit score high is easier than building credits, but don’t let your guard down. If you are unable to pay your bills on time, or if you charge a billing balance that you cannot repay, your score can begin slipping.
Conclusion
What is a good credit score? If your FICO score is above 670, you have good trust. There are many benefits of good trust, including access to some Best credit cards for good credit With low interest rates, it is important to understand how your credit habits can help you or hurt your credit score. If you know how to get a good credit score, you can take advantage of all the positive financial opportunities associated with good credit. These include access to Best credit cards todayProvide everything from cashback rewards Luxury Travel Benefits.
