Finance — 6 months ago

What is a Good Credit Score?

by Eddie V.

Credit, Credit Score, What is a Good Credit Score

Credit Score Overview: What is Considered Good?

A good credit score is a score above 700. This kind of a credit score typically helps in getting credit cards and it also helps in getting your loans sanctioned easily and at affordable rates. However, a good score though may help you get ahead it is never the sole deciding factor in determining whether or not you will get the loan or credit card approved or not. You can easily get your credit score estimated for free online. After getting your score, do a deep analysis of what is working and what is not working out for you. This will definitely help your financial health tremendously.

After you get your score do remember, the scoring is not very rigid, that is what it is better to obtain your credit score from different agencies than sticking to just one. As a rule, most organizations who get a credit score done, follow the guidelines laid down by FICO.

What the lenders look for in a good score?

Most lenders look for a good score in terms of your total outstanding debt and the frequency with which you pay off your debt. Having a good score will definitely help you with the prospect of borrowing money easily. As there are a different set of criteria pertaining to each lender, there might be a lender who just might think your good score is actually only fair according to your standards.

Credit
Do not be disheartened by it. Look for financial solutions that best help your specific need. When a credit card company is set to grant you a credit card, they typically look at your outstanding dues in your present credit cards. They also look for your missed installment payment. With a good credit score, of course, you stand a better chance than with no or poor credit score. For people who never had a credit card, the main factor a credit card company will look for is annual income and duration of being employed. The same rules apply for loans as well. Be it a loan or credit card, the need that the lender is covering for must be well-established by you along with your ability to repay the debt.

Why do you need to look at your credit report?

If you have been thinking you should have a good credit score yet receive the news that your score is actually fair or even poor, then it is time for a closer look. Many times there are discrepancies in the credit report prepared by the credit card companies. Make it a habit of going through your credit report as soon as you get it every month. If you find certain numbers not adding up or maybe even falsely added items, make sure to report it as soon as possible. This will help you prevent your credit score to get falsely affected.

Credit Score

Why do lenders look at your credit score?

The main reason a lender considers your credit score carefully is that it is a pointer to how much risk you hold. Having a good score indicates that lending you money will not let the lender loose his investment and also get him adequate profit through investment. If you have a poor credit history which is a reflection of your financial health then the lender will refuse you to borrow money. You are a potential risk to the lender under such circumstances.

Make sure you maintain your debt to income ratio this is the most crucial factor to help you boost your credit score. Paying off your installments regularly is also another important task. Also, try to clear off active credit first rather than the written-off ones. A good credit score is an indication of your financial condition, so it is highly important that you pay adequate attention to it.


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