How Good Is Your Credit Score?
A credit score is a significant factor in a consumer’s quality of life. Many different things, including housing, transportation, and work, can be determined by this three-digit number. Most consumers are unaware of all the elements that are taken into account when determining this number. Several factors affect your credit score, including how many accounts you have, your financial history, as well as the total amount of debt you have. Further, declaration of bankruptcy, as well as the number of accounts that are being collected, will also detrimentally affect your credit score.
Your credit score represents a risk that a lender would assume if they lent you money. There are two primary companies that regulate credit ratings. Two popular credit scores are the Fair Isaac Corporation's FICO score and the VantageScore, which was created in collaboration with the three major credit reporting agencies: Experian, Transunion, and Equifax. Both of these systems employ numbers in the range of 300 to 850 to demonstrate a consumer's credit-related responsibilities.
Below is a breakdown of credit scores and what it entails.
800 - 850: Outstanding Credit
A score of over 800 may be given to people who have used credit consistently, paid their bills on time each month, and kept minimal credit balances. People with excellent credit scores frequently have access to more loans and enjoy lower interest rates because it represents the lowest risk to a lender.
740 - 799: Excellent Credit
A score in this range denotes a customer who manages their credit responsibly and typically pays all of their credit card, mortgage, auto loan, and rental payments on time. Your likelihood of falling into this score category will increase if you keep your credit card balances low.
670 - 739: Good Credit
This category includes those within or slightly above the 695 FICO national average score. Although those with good credit may have several financing alternatives available to them, they might not always receive the best terms or largest loans.
580 - 669: Fair Credit
Consumers with a few negative marks but nothing too severe on their records often receive scores at this level. Consumers with fair credit can usually get some financing, but it frequently comes with hefty interest rates.
Below 580: Bad credit
Someone with a credit score of 300 to 580 has a significantly damaged credit history, maybe as a result of numerous collections, loan defaults, and/or bankruptcy filings. They are unlikely to receive any credit possibilities.