What is a Good Credit Score?

Meta description: Is your credit score good enough to keep asking for loans? Find out now!

Nowadays, it's so hard to qualify for a loan. There are several requirements that you have to meet in order to be able to ask for yet another loan. What's more, the majority of people have no clue what a good credit score is. Most of them didn't even know the fact that a credit score exists.

In any case, this is your chance to learn. A credit score is ranged between 300 and 850 and is calculated on several factors. If you have 850 on your credit score you will be able to ask for any loans, anytime and get them on the spot because it means you are the perfect client. 

However, as that is very hard to achieve and we are all humans and make mistakes, a good score starts from 670. Scores that are lower than that will probably have a hard time getting loans.

There are five crucial factors which determine your credit score and they are pretty simple to follow, actually. Read these points carefully so you can have a broad idea of what is good credit score looks like.

1. Payment History (35% of your credit score)

This is one of the most important factors. Do you pay your bills on time? It's crucial that you do because if you didn't pay all of your credits on time, you'd have to pay them timely for the next two years in order to have the perfect score. 

Did you know that missing a payment by 30-days can reduce your credit score by 20 points? That's extremely significant if you are looking to make constant loans.

Try not to overextend yourself and say things like "I can pay that tomorrow" because each passing day of lateness are more points deducted from your credit score.

2. Amount Owned (30% of your credit score)

This is basically calculating your credit balance against your high credit limit. For example, if you have a $5,000 credit limit, if you keep your debt below $500 you will be in the 10% range of available credit, which really is great.

Going with the same example of $5,000, you can go ahead and divide it by 10. You'd usually want to pay your balance below this price, in this case, less than $500. 

3. Length of Credit Accounts (15% of your score)

The title speaks for itself. The older your credit account is, the better. Our advice is that you keep your credit cards opened, even if you don't use them anymore, but don't forget to use them at least once every six months.

Remember, credit accounts with 15-20 year history are more powerful than newly opened accounts.

4. Amount of New Credit Accounts (10% of your score)

Don't buy too many credit cards at a time because that might raise suspicions for the bank. Try to go with a small line of credit cards and just build from there. Don't buy, for example, ten credit cards a time.

5. Type of Credit Used (10% of your score)

It's to your advantage if you have more credit cards of different types because they will add to your score!

This is exactly how your credit score is calculated and remember, a good credit score is between 670 to 850!

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Why It Is Important To Know How Good Your Credit Score Is?

There are a lot of factors that determine your credit score. Your credit score is incredibly important in regards with your loans. To have a better understanding, if you have an amazing credit score, you will be able to loan more money much faster. However, what is a good credit score and how is it calculated?

Well, a credit score is generally split in 3 categories:

- A High Credit Score

- A Middle Credit Score

- A Low Credit Score

Let's take it from the bottom to the top. So, if your credit score is low, it is pretty clear that loaners will be incredibly cautious when lending money and that you won't be able to loan as much as you'd want. Or, if you're unlucky or if your score is way too low, you may not even be allowed to take any sort of loan, no matter to which bank you're going to.

If your credit score is middle, you're together with the majority of the people that usually don't ask for a lot of loans but are faithful clients that always pay their debts. Therefore, you will be able to ask for loans that are even average-high.

Credit scores are composed of a varying degree of numbers, anywhere from 300-850. A score is comprised of a scope of variables. A quick look at the payment history consists of thirty-five percent of the score. Watching the sum a person owes is thirty percent. The credit history longevity is fifteen percent of the score. New spending information makes ten percent. Consideration of the different sorts of credit utilized is the remaining ten percent of the score number.

Amazing credit is a score of 760 or above. Very good credit is a notch beneath 700 to 759 score. A good score falls in the scope of 680-699. An alright score is 620-679. A fair or so-so number is summed up in the 580-619 section. On the off chance that a score lies in the 300-579 area, the score is considered poor.

It is significant to the one needing credit to study their report thoroughly six to twelve months before applying for a major loan. In checking the report and seeing the score, you can search for any errors and ensure points of interest are listed correctly. This time frame permits a credit seeker the chance to begin a process of making corrections where required if errors were found. In the event that errors still show on the report when applying for a large loan, you must tell the bank of these mistakes.

There is also the chance to increase one's credit score. This should be possible in making sure that monies owed are routinely paid and decreasing extraordinary account balances. Since timeliness of payment is noted on every report, it is imperative to make payments on time. It would be in the borrower's best enthusiasm to not take on new debt.

So basically if you have an alright score or above, you're almost guaranteed to have good deals and be able to make as many loans as you may wish to, no matter the price you're asking for.

Therefore, always be careful of your credit score before asking for a loan, as you may get turned out very fast and the bank will surely remember you. That's why, you have to thoroughly study your bank credit score as good as you can and try to repair it, if needed.

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