A credit score is a single figure that represents how creditworthy you are from the lenders’ view. A low credit score is an indicator that you have not portrayed yourself as trustworthy (although, fortunately, there are ways you can repair your credit score so that it doesn’t go against you in the future), and a high credit score shows you have proven yourself to be responsible and reliable with the timely payment of debts or bills. Credit scores are determined by a few companies called credit reporting agencies, which specialize in collecting data about your financial habits.
The credit bureaus exchange data with financial institutions or lenders and are concerned with how much you have borrowed, how much you owe, and your repayment patterns. After collecting the information from those to whom you are indebted, they come up with an estimate of how creditworthy you
What is the measure of a good credit score?
There are two commonly used credit scores: those issued by Fair Isaac Corp (FICO), popularly called FICO score; and those issued by the aforementioned three major credit bureaus, which are referred to as VantageScore. Both scores use numbers between 300 and 850. Maybe you had a look at your credit score and you are not sure if it is good or bad. Here is a guide according to John Ulzheimer, a consumer credit expert, to help you understand your score:
| Credit score | Rating | Implication |
| 300-650 | Bad | A score lower than 650 implies it will be hard to get credit, and if you do, you will pay exceptionally higher |
| 651-700 | Fair | Your loan request will most likely be approved, but not at competitive rates. |
| 701-759 | Good | Your credit application will likely get approved, though not at the best rates the lenders can offer. |
| 760 and above | Excellent | You will get your credit request approved, and you are guaranteed the best rates across all lenders. |
You may also gauge your credit score using FICO’s credit score ranges below:
Credit score Rating
800-850 Exceptional
740-799 Very good
670-739 Good
580-669 Fair
300-579 Poor
Why is a good credit score crucial?
Your life will be much easier with a good credit score rather than with a bad one. You should do all you can to have a good score, even by engaging professionals like BoostCredit101, who you can easily find online at https://www.boostcredit101.com/. A good credit score will come in handy in the following cases:
- It will be easier to get loans – You can easily get a loan with a good score, but with a bad one, the chances of your loan being approved are lower. Also, if approved, you will pay higher interest rates and have to go through certain hurdles, like giving collateral or having a cosigner.
- Your insurance rates may be lower – Having a good score could help you pay less for car or property insurance.
- You may get an apartment – A good score is a key requirement
to obtaining a mortgage, and it can even help you get an apartment. Conversely, a bad score can cause prospective landlords not to rent out their apartments to you, or to demand higher rent from you due to the fear that you will make late payments.
- You may not have to pay deposits on utilities – At times, a good score can mean you do not have to pay deposits on utilities like electricity, water, and gas if you establish the service in your name, or when transferring the services to other locations.
A credit score is more than a number. As you can see from the above information, your score can help or hurt you. Thus, you need to do what it takes to have a good score or to repair a bad one.
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