Subscribe Feed (RSS)If you have ever taken a loan or even made a credit car payment, chances are that you will have a credit profile that is accessible to all the financial institutions. Now depending on the type of credit score that you have, you can get pre-approved for loans and credit cards really quick, while others may struggle to get a loan from the same financial institution. A good credit score can do wonders for you. Now you may ask, “what is a good credit score”?
A credit score is actually a scale that has values from 300 to 850 with 300 being the lowest credit score and 850 being the highest credit score. The score is calculated on a basis of a mathematical formula and predicts the repayment ability or credit worthiness of an individual. The credit score is actually an amalgamation of the payments made in the past. This helps the lenders assess whether the same individual will also make the repayment in the future or not. Quite simply, if you have a great credit score, you will pay lower interest rates that those that have bad credit rates.
There are 3 major credit bureaus that compute their own standard of “what is a good credit score”. The three companies are Equifax, Experian and Trans Union. Usually a score of 700 and above is considered to be a good credit score. While those individuals that fall in the category of 600-700 are considered average or normal. Those individuals that have a credit score below 600 are considered to be risky and will be charged a higher rate of interest than those that have a great credit report. Some of the ways in which the credit report can be improved are
- Making all payments on time
- Making the payments in full
- If there is any discrepancy, contact the credit bureau and get the score updates
- Maintain a record of all your financial transactions.
