Good Credit Rating Score |
By Ashley Russell on April 15, 2011
.jpg.aspx?width=75&height=75) What is it?
In the world of loans and finances, your credit rating score is of vital importance. A credit rating score is a credit number assigned to you based on your achieved creditworthiness. This score takes into account separate financial factors such as, but not limited to, your payment history and your current amount of debt. Many companies have come to use your credit score rather than going over your credit report in order to decide whether or not you pose a credit risk.
Why is it important?
If you are looking to get a home, a loan, a credit card, or finance things such as a car, having a good credit score is the key. Low credit scores will show financial institutions that you are unlikely to pay off the loans you want to take out, which makes you a high risk customer. In the eyes of financial institutions, high risk loan candidates are more likely to default on their loans. This means higher fees and interest rates are needed to make up for their potential to default. Having a good credit rating will ensure you will be able to get loans with low interest rates and fewer fees than high risk clients.
How to get it?
Many people understand that good credit is important, but few understand what exactly a "good" credit score is. It is often hard to understand what constitutes a good credit score, or how your score compares to others for a couple reasons. First, it is hard because the exact metrics that go into creating your credit score are complicated and are usually not published. Simply knowing your credit history does not necessarily mean you will be able to accurately predict your credit score. Additionally, different credit bureaus use different factors to produce credit scores and different financial companies have different standards for what is a good enough credit score to get their best rates. On average, however, if you have a score above 700 you will not experience many difficulties receiving good rates. Most financial institutions have minimum credit scores for their best rates from 720-760, with some below or above that. Comparatively, a rate below 600 is considered too high risk to get a loan from even the largest financial institutions. For comparison, credit scores range from 300 to 850, so it is very obvious that 700 and up is a very respectable score. |
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