What Is Considered A Good Credit Score?
What is considered a good credit score depends on who you ask, and what you intend to do with it. Of the four most popular credit reporting agencies- Equifax, Experian, TransUnion and FICO- the most important one nowadays is the FICO score. Created by the Fair Isaac Corporation, the FICO credit score takes into consideration the amount debt you have taken on and successfully paid off. It is the number most lenders look at first when deciding your trustworthiness, and your overall credit score determines your monthly payment on home and auto loans.
Credit scores range from 300 to 850, with the average around 680. Generally, anything over 720 is what is considered a good credit score. A common pitfall with FICO is that you must have debt in order to improve your credit score. For example, if you have a million dollars in the bank and pay cash for everything, your FICO score will be low, due to the lack of debt repayment history.
Many responsible people run into this snag when applying for a home loan. Their credit score is too low to qualify for the best rates, despite the fact they have never missed a payment in the first place (by never having a payment to make!).
So how do you improve your credit score? There are several steps to consider: firstly, you must ensure all your monthly payments are made on time; you should also pay down your debts as quickly as possible and then build up your savings account.
What's Considered A Good Credit Score For Home or Auto Loans?
While anything over 720 is considered a great credit score, the difference between 750 and the perfect score of 850 is marginal. Generally speaking for all loans, if you are over 720 you will qualify for the best rate possible.
Credit Report Agencies: Equifax, Experian, TransUnion
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