What is considered as good and Bad credit score

What is considered as good and Bad credit score

Last Updated on December 6, 2023 by admin

Do you want to know  a Good Credit Score should look like? Or you want to know what could be considered as good credit score ? Most of us want to know how improve  credit score? whatever challenge you’re facing about a credit score have been explained in this article.

 

What is a good credit score?

A good credit score typically ranges between 670 to 850, according to the FICO credit scoring model. However, different lenders and credit bureaus may have their own scoring systems, so the specific definition of a good credit score can vary. Generally, a higher credit score indicates a lower risk for lenders and can increase your likelihood of being approved for loans and credit lines with favorable terms and lower interest rates

Generally, a good credit score can be defined as the three-digit numbers ranging from 300 to 850. Range always depends on credit score model, and credit score range from 580 to 669 these are considered fair, and 670 to 739 are considered good while 740 to 739 are considered excellent.

However, we have may different of score models, and we use other data when calculating credit scores. Credit scores are usually used by potential lenders and creditors. Example like banks credit card companies and others.

Furthermore, a good credit scores are types of considered score that can help you get attractive rates and interest terms when you apply for any loan. But having fair or bad credit scores are complicated, the most common FICO sees feature scale of 300 to 850, on that scale a credit score between 670 and 739 are absolutely considered good.

Credit scores are used to predict how likely a person is to pay back a loan on time. That’s simple enough. start with popular credit-scoring companies FICO® and VantageScore®:

1. FICO says good credit scores fall between 670 and 739. That’s on a scoring range from 300 to 850.

2. VantageScore’s good scores are reported to fall between 661 and 780, also on a 300–850 range

 

factors that can let your credit scores considered good

Also read: Steps on How to get preapproved for a mortgage loan

 

What factors  will inrease my credit score ?

Several factors can contribute to a good credit score, including:

1. Pay your bill on time every single month

Timely payments on your credit accounts, such as loans and credit cards, can have a significant positive impact on your credit score.

 

2. Lower your credit utilization
The credit utilization can be considered by the range of credit limit you used. Example you have $20000 and you deposit $10000 that shows that you’re utilizing 50% if you’re available credit.

 

3.Check your credit report

You can Check credit report from each of your three credits bereave once in a year. No that, if you’re reviewing your credit reports can help you correct any errors that may show a negative impact on your score, so you need to correct them.

4. Consider a secured loan.

If you want to start improving your credit score, you need to build up with secured card, that is a good way to start. Choose a secured card that reports to three credit bureaus for the best chance to have your good payment before improve your credit score

5. Length of credit history:

The longer your credit history, the more data lenders have to assess your creditworthiness. Generally, a longer credit history is considered favorable.

6. New credit applications:

Applying for multiple credit accounts within a short period can temporarily lower your credit score. It is advisable to limit new credit applications unless necessary.How many times you’ve applied recently for new credit. The effect on your scores might be minor, but a lot of new hard credit inquiries could still give a negative impression to lenders.

 

steps to improve your credit score

The main steps that can let your credit score considered good is to improve the steps mentioned below

1. Build your credit file

You need to open new account that can reported to the credit bureaus, the lenders and issuers report to all three as an important step to take to build your credit file.

2.Don’t miss payment

Try as more to preserve your history payments because is the most important factors they will determine in your credit score, and have a long history of on time payments, this can help you require excellent credit scores. To do this, you must not miss loan or credit card payments

3. Catch up on past due accounts

If you can bring up your bills could help you, but when you insist on not paying, it will remain on your credit report for up to seven years. In addition, it will stop further late payments from being added to your credit history as well as additional late fees.

If your performance on what we discussed is good, you will see that your credit score will considered good and becomes excellent.

4. Keep an eye on your credit history.

you should Show responsible credit habits over a long period can help your credit scores.

5. Apply only for credit you need.

If you apply for multiple credit cards and loans over a short period of time, lenders may incorrectly think your financial situation has changed for the worse.

6. Avoid your credit limit.

Experts recommend keeping your credit use below 30% of your available credit—across all your credit card accounts.

Also read: Student financial aid and loans: what you need to know and how federal and private student loan work

What Is FICO?

FICO is credited with creating the first standardized scoring model. That was 1989. In the 30-plus years since, FICO has created multiple versions of its scoring models. But it says today’s models are still very similar to the original. FICO says it has the most widely used scores in the industry, claiming they’re used in more than 90% of lending decisions in America.

FICO is pretty specific about what it views as the most important credit factors: Payment history makes up about 35% of its scoring. About 30% is based on the total debt. The other primary factors are credit history (15%), credit mix (10%) and new credit (10%).

What Is VantageScore?

VantageScore entered the picture in 2006, in part, to compete with FICO. It’s managed independently, but it was founded by Equifax®, Experian® and TransUnion®, the three major credit bureaus. That’s notable, because those bureaus supply the credit reports mentioned earlier, the ones often used to calculate credit scores.

VantageScore doesn’t give percentages, but it is clear about what’s crucial to its scoring models: It says credit utilization is extremely influential. Credit mix and experience are highly influential. Payment history is moderately influential. And credit age and new credit are less influential.

Here are the credit score ranges to be aware of and what they mean for you.

Poor credit scores: 300 to low-600s
Fair to good credit scores: Low-600s to mid-700s
Very good and excellent credit scores: Above mid-700s
highest credit score you can get is 850.

What’s a Good FICO Credit Score Range?

When it comes to “what’s good,” FICO says scores between 670 and 739 qualify. Scores in that range, it adds, are near or slightly above the U.S. average.

What’s a Good VantageScore Credit Score Range?

When it comes to VantageScore, scores between 661 and 780 might be considered good.

 

what is Bad credit score

A bad credit score generally falls below 630 on a scale of 300-850 for the most common scoring models, FICO and VantageScore. Scores of 630 to 689 are considered fair credit.

Here’s how the categories generally fall:

. 720 and above: Excellent credit

. 690-719: Good credit

. 630-689: Fair credit

. 300-629: Bad credit

You can improve your bad credit

1. Credit-builder loans.
2. secured credit card.
3. Becoming an authorized user.

Culled from capitalone

Meet Ogbeide Frank, popularly known as perere, a blogger who loves writing about finance and Tech. He studied Business administration at the Ambrose Alli University Ekpoma and Mobile Communication at Orange College Malaysia .Frank have worked as a banker and consultant in variety of Nigeria agencies

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