You must have heard people discussing about some credit scores and how it should be in a suitable range for things to fall into place for them. You must be wondering what it is and its purpose. Well, the score in question is a number you get after calculating your credit information. This number or score helps you approve loans for houses, cars, mortgage interest value, etc. What’s a good credit score anyway? Let’s find out.
What Does A Good Credit Score Mean?
It is a number calculated after utilizing and analyzing your credit information; the payment history, debt on you, and the length of credit history. This score the likely hood of you paying back the money.
How is A Good Credit Score Calculated?
Two kinds of score calculating models are present there is a FICO range and a Vantage Score range. The number you get is mainly for potential lenders or creditors, like banks, credit card companies, or car dealerships.
This number decides how good you are at paying back the money and the kind of history you have on loans.
However, if you are in search of a perfect number, sorry to burst the bubble, but there is not one. It is different according to various circumstances of that individual. Nonetheless, according to FICO, a good credit score lies in the range of 670 to 739, whereas the number that lies in 667 to 780 is best according to Vantage score.
What Affects A Credit Score?
Here are some factors that make up and affect your credit score:
Payment history: Always keeping up with yourpayments on your credit account can help up your scores. However, missing them or filing for bankruptcy can really jeopardize your scores.
Usage of Credit: The number of accounts that have balances, how much you owe and the extract of your credit limit you’re using all come into play here.
Credit History Length: This part includes the accumulative average age of every credit account, including oldest and new accounts as well.
Account Type: This is also known as “credit mix,” which involves managing both installment and revolving accounts.
Recent activity: To evaluate whether you have recently applied or opened new accounts.
Improve Your Credit Scores
The first step improving your scores is to make the underlying factors that affect your scores your focal point.
- Ensure that you pay your debts on time since even one single late payment may hurt fall back your credit scores which can remain on your credit report for years. In case you think there is a possibility of missing out on a payment, talk to your creditors; ask them if they can work with you or offer other options.
- Always keep your credit card balances low. Your credit utilization rate is an essential scoring tool that compares your current balance and credit limit of revolving accounts.
You can always reach out to Reddoor Funding for your troubles. Our professionals will help you with the best loan plan. Call 832 539 1099.