The term credit score is mostly used in the credit and finance industries. Unknown to many, these two words can make drastic changes to a person’s financial career. There are scores that have the capacity to open new financial avenues while there are other scores that force creditors to turn their backs on you. What makes a this score so important, anyway? The following are some information that can help guide you in understanding this score better.
Credit Score Range
The three authorized credit bureaus, Equifax, Experian, and TransUnion, provides for a person or company’s credit score. They use the software program that was developed by the Fair Isaac Corporation or the FICO in order to find out the score of an individual that is usually based on reports that are made available in their central database. Much reliability is spent on their own credit history or on the credit report of the individual which can differ from the credit reports of the other bureaus. The result is, the resulting scores given by these three bureaus might have slight differences from each other. However, mere knowledge of a credit score is not enough to determine the creditworthiness of a person. The range should be determined in order for the proper assignment of the appropriate credit rating to the person. FICO scores are within the range of 300 to 850 with a credit rating that ranges from excellent to poor.
An Excellent Credit Score
This is a score that is above 750. Once you have attained this, getting a credit rating will be easy, and the chances of earning low interest rates becomes possible. This is because people with excellent scores are considered as having no risk or having minimum risk to the creditor, thus resulting in the availment of better deals and services.
How to Get an Excellent Credit Score
People who already have an excellent score should make it a point to maintain their rating, especially if within or near the borderline. A simple slip from 760 to 749 makes a big difference and may cause a change in your score. There are also instances when a small one point dip may not also significantly affect your credit prospects. However, one single point plays a very important role in deciding the interest rates that will be given to you.
A Good Credit Score
This is a score that falls within the range of 720 to 749. There are times when creditors consider scores in the range of 660 to 719 as good. However, people with a score of 650 but below 720 might struggle a little bit in order to get the best deals as compared to those with excellent scores.
How to Get A Good Credit Score
Keep utilization rate low. Aim for credit cards that have high credit limits, and avoid the urge to keep on spending. Pay your bills on time. Try to minimize your debts and avoid unnecessary credits. Limit credit cards to only two or three.