Whats a Good Credit Score?… You’re At The Right Place To Find Out
Knowing whats a good credit score is important and should not be ignored.
The credit score is also known as the Fair Isaac Corporation (FICO) score. The Fair Isaac Corporation is the management company in charge of the scores reporting.
Most people are of the opinion that since they have managed to abstain from all types of debt, then they don’t have any business knowing their credit score. However, truth be told, it is not that easy to ignore your credit score.
So, Whats a Good Credit Score?
Do you actually know whats a good credit score? The answer to this may vary from region to region as well as from one financial institution to another. According to the US Bureau of Economic Analysis (BEA), your credit score is increasingly being used by insurance companies, landlords and employers as they seek to review your financial status.
Many Folks Simply Do Not Know Whats a Good Credit Score
A poor credit score could see you fair badly in terms of getting favorable considerations for good insurance rates, a good apartment as well as a lucrative job. The top credit score is 850 while the lowest is 300.
Most people who have a pretty normal life devoid of any major damaging credit events would have their credit scores ranging from 600 to 700. To answer your question of whats a good credit score, it is important that you first of all learn how experts arrive at your credit score in the first instance.
Credit Score Calculation
The credit score is a number used in the US to depict your life and its relation to debt and established debt instruments. It can be termed as a private algorithm. Simply speaking, the credit score is the chief indicator of your overall creditworthiness.
It is calculated using the following 5 key categories:
- Credit types such as auto loans, mortgages, installments and revolving credit determine 10 percent of your score.
- Credit inquiries where you fail to clinch the said credit impact negatively on your score. These inquiries account for a further 10 percent.
- Credit history accounts for 15 percent of your score.
- Utilization accounts for a further 30 percent. This refers to credit used vis-a-vis the available credit.
- Aspects of your payment history such as bankruptcies, collections, missed payments etc make up for a whopping 35 percent of your credit score.
The above categories have in no way addressed the burning question of whats a good credit score? Here’s the simplified answer. A good credit score is anything above and including 760. With such a credit score, you can rest assured that banks are going to fete you with their best rates of interest.
Until and unless you reach a point in your life where the question, what’s your credit score means nothing to you, it’s important to keep tabs on your credit score and you can embark on this by understanding the dynamics of whats a good credit score.
Learn more about improving your credit score at about.com
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