Good credit scores-Are you a lenders’ favorite?
The credit scoring methodology was developed by Fair Isaac Corporation. For similar reasons, credit score is also referred to as FICO score. Credit score forms the backbone of your credit rating. Good credit scores means you are a favorite of lenders and it indicates that your finances are under control. However, a wrong step taken jeopardizes your finances to a great extent. If you have a ruined credit report, it doesn’t mean that you cannot repair it. There are several ways to improve your credit score.
Credit score, the numerical representation of financial health indicates if you are eligible for various financial benefits offered by lenders/creditors. In United States, a good credit score is usually 723, if the maximum is 850. Given below is a table that shows the credit score range and what it implies.
| Credit Score range | What they imply | What you should do |
|---|---|---|
| 499 and less | Implies that you have a damaged credit rating. You can avail new credit but rate of interest will be very high | Unless it is very important, stay away from the deal |
| 500-580 | You can apply for credit but the lender/creditor will not offer you competitive rates. | Check if you find the terms and conditions of the loan feasible, if they are and if you are confident about your repayment capacity, go ahead with the deal. |
| 580-619 | You are living on the edge. A wrong step can send you tumbling down. In case of prime lending 620 is the cut off mark. | Be very cautious in your monetary movements. |
| 620-679 | Your credit score is said to be “Ok”. | The closer you are to 679, your chances of getting lower interest rate and favorable terms get enhanced. |
| 80-699 | You are in the “Good” category. | There is a very thin demarcation between good, very good and excellent. |
| 700 and above | Your credit rating is said to be “Excellent”. | You will have no problems in getting loan as per your requirements. |
The advantages of having good credit scores are many. As mentioned above, if you have a good credit score, your chances of getting credit (as per favorable terms) increases greatly. The lenders also consider you to be financially responsible. And good credit scores also allow you to enjoy lower interest rates. It also allows you to reside in a locality of your choice. Often landlords/homeowners check the credit score or credit report of renters intending to rent an apartment.
Your chances of working in a good place are also increased. There are many employers who lay a lot of stress on your credit report. If you have declared bankruptcy, your chances of working with a good employer also diminish.