As you work to build your credit score, it pays to gain knowledge as to what is regarded as bad, good, and excellent credit score number. This will give you an idea of where you should aim.
What is a Good Credit Score?
A score between 700 and 749 is considered to be ‘Good’ while a score above 750 is regarded as ‘Excellent’. The average credit score falls between 600 and 750. A high credit score shows better credit decisions. It builds confidence among creditors that you will be able to repay your debts in full as agreed.
Lenders such as credit card companies, banks, and mortgage loan providers use credit scores to determine whether or not they should offer credit to you. They also use credit scores to assess what the terms of the offer will be, in terms of down payment and interest rates.
The Importance of a Good Credit Score
Having a good credit score can help make your life a lot easier than when you have a bad score. Have a look at some benefits of having a good credit score number.
It Can Come in Handy When Getting an Apartment
In the recent times, landlords have been using credit scores to screen their tenants. Therefore, a bad credit score, especially when caused by an outstanding rental balance or eviction can really reduce your chance of renting an apartment. On the other hand, with a good credit score, you can save yourself the hassle and time of finding a landlord who will ignore your damaged credit.
It is Easier to Get or Keep a Job
A lot of employers usually conduct credit background checks as a way of determining whether they should hire you or not. If you have not shown financial responsibility, then an employer might show hesitation I hiring you. For instance, they might believe that your debt level is too high for the salary they are offering you. Additionally, employers will also have a look at your credit score before offering you a promotion or pay rise. This mostly happens for executive and financial-related positions.
Better Negotiating Power
A good credit score offers you with the ability to negotiate a lower interest rate on your loan or credit card. If you are in need of more bargaining power, then you can refer to the amazing offers you received from other companies in regards to your credit score. Nevertheless, if you have a low credit score, creditors will not be interested in discussing loan interest rates. Additionally, you might not have the liberty to shop around.
It makes it Easier to Get a Loan
With a bad credit score, you will most likely avoid making new loan or credit card applications since you fear your offer will be turned down. Having a good credit score doesn’t always guarantee approval for a loan or credit card as lenders will always have a look at other factors. However, it offers you with a great chance of being approved. When you have a good credit and you decide to apply for a loan or credit card, then you can do it with a lot of confidence.
How to Maintain a Good Credit Score
As seen, there are a lot of benefits to be accrued with maintaining a good credit score. Here are some tips regarding how to maintain a good score.
Know What a Good Credit Score Entails
The first step to maintaining a good credit score is to know what it really entails. The more knowledge you have, the easier it will be for you to maintain. Factors such as your level of debt, recent credit, payment history, credit age, and mix of credit play a very important role on your overall credit score. Therefore, you have to keep these factors in mind when planning to boost your credit score number.
Pay Your Bills Early
This tip applies to all your bills, and not just loans and credit cards. While some bills are not reported to credit bureaus after paying, they could be reported if you don’t pay. This applies even for a small library fee. Due to this, you should consider paying all your bills before deadlines to have a good credit score.
Keep Your Old Credit Cards to Maintain a Long History
There are several reasons why you should keep your old credit cards. Doing this can be of benefit to you as the length of your credit history accounts for 10% of your overall credit score. This is mostly critical for older cards since they provide a longer record, which is good when working on your credit score.
Check Your Credit Report For Errors
Having errors on your credit report is not unheard-of. In fact, they are quite common. Due to this, you need to keep an eye on your credit reports and fix those small issues. Doing this might help you maintain a good credit score. It might be worth it to check out sites like Creditrepair.com who can help you improve your credit score.
Keep Your Balances on the Credit Card as Low as Possible
The higher the balance on your credit card, the worse your score is likely to be. Your balance should be around 30% your credit limit for you to maintain a good credit score. Charging over 30% your limit is risky even when you have plans to pay what you owe the issuer after getting your billing statement. Your card issuer normally reports the balance immediately your statement closes. Therefore, if your balance is high, there will be an effect on your credit score even when you pay your balance in full.
There are numerous benefits of having a good credit score such as enjoying lower interest rates on your loans and credit cards. Additionally, a good credit score can help you save a lot of cash on security deposits on utilities, and also on insurance. With our tips on how to maintain a good credit score, you should be well placed to achieving the many advantages associated with a good credit score number.