A Credit score is an analytical number that calculates a client’s creditworthiness. It is based on credit history. Bankers use credit scores to calculate the possibility of an individual repaying his loans and debts. Credit scores usually vary from 300 to 850. The greater the credit score is, the more the person can be financially trusted. A good credit score depends on the circumstances. A good score comes in handy when applying for a deed or loan.
A credit score above 700 is generally considered a good credit score. A score of 800 or above is defined as an excellent credit score.
VantageScore is also a type of credit score, which is commonly used by bankers and lenders. The VantageScore was refined by three leading credit bureaus including Experian, Equifax, and the TransUnion.
Benefits of Credit Score:
- Credit scores are the sole decision-making tool for the bankers and lenders. Credit Scores define how likely the client will repay his loan on time with interest.
- A good credit score is crucial as it defines whether a customer is qualified for a loan. A good credit score also helps in renting the apartment and even getting the cell phone service the client wants.
- A bank provides a lot of concessions for customers with good credit scores like higher loan amount, low-interest rates, faster loan approvals, and higher installment periods.
Credit score rating:
- Excellent Credit: 750+
- Good Credit: 700-749
- Fair Credit: 650-699
- Poor Credit: 600-649
- Bad Credit: below 600
How to get a good credit score?
- To get a good credit score, the client should maintain positive results in Payment history, Credit utilization, Length of Credit history, Mix of Accounts, and New credit inquiries. Pay the loan payments and interests on time.
- The amount of debt to be paid should be below 30% and should be 10% of the total credit limit. Keep up credit accounts for a long period and incorporate a mix of accounts over time, for example, revolving loan accounts and installment loan accounts.
- A Credit score is evaluated based on some factors, mainly the payment history. The repayment records subsidize to 35% weight while calculating the credit score. It is also evaluated based on total available credit balance, credit utilization, and credit cards and a number of loans.
Taking good care of the credit score is crucial for organizations and individuals who constantly depend on bank loans and mortgages.