Whether we like it or not, credit is a big part of our lives and credit worthiness is a way of determining whether a person borrowing money is likely to pay it back on time or not; in short, how much of a risk they are. You are evaluated on your record of paying bills on time and making payments on time, and all these transactions are reported to the three major credit reporting companies.
Your credit is looked at particularly closely when you are making a major purchase, such as a new house or a new car, and of course the lender needs to be reassured that you are able to make the payments in a timely manner. The credit score range is largely determined Vegasgoal by the ability to make payments, based on your payment history.
In general, you will have a higher credit score if you have a good track record of paying bills and making monthly payments on time, whereas your score will be low if you are routinely late in making payments. In addition, if you are only making the minimum payment each time on your credit card balances, this can also mean that your credit score will be low.
Each of us has a particular credit score assigned to us, based on the above criteria, and it falls somewhere in the credit score range of 300 to around 850. The higher your score, the more reliable you are considered to be, and a company is much more likely to want to lend you money. Having good credit can help you in other ways too, for example if you are considered to be a bad credit risk, you may be less appealing to investors as well as lenders.
The FICO (after the Fair Isaac Corporation that devised the formula and the way to measure credit) credit range categories are as follows:
Very good 700 to 850
Good 680 to 699
Average 620 to 679
Low 580 to 619
Poor 500 to 579
bad 300 to 499
Once you understand the credit score range and how important your score is, it makes it a little easier perhaps to try to maintain good credit, or repair poor credit. It is particularly important to try to boost your credit score if you are buying a car or applying for a mortgage as it will help you to get a better interest rate.
As can be seen, getting and maintaining a good credit score is essential, and you should consider it a priority in your life if you want to be successful. In fact, it should almost be considered as important as getting a college education, and if you have a poor score, it can always be improved, but the goal should be to keep your score at a good level.
A good credit score really can make a big difference to your life, as well as potentially saving you money. Just a small difference in your score can make a big difference to the interest rate that you are given on a loan, which can add up substantially over the course of several years. It is no exaggeration to say that having a good score is part of the American dream and should be taken that seriously.