No matter where you’re standing financially, it can help to know your credit score. A lot of us are oblivious to our credit scores. It can help to understand what makes up a good credit score, as where as where your credit stands.
Having and maintaining a good credit score is crucial to your long-term financial success. In this article we’re going to cover the different ranges of credit scores, how to determine your score, the credit scoring process, and the benefits of having a good credit score.
What Are The Ranges Of Credit Scores
The range of credit card scores falls within the range of 301 to 850. There are different ranges between those numbers which correspond to a certain credit standing. However, even those ranges aren’t accurate 100 percent of the time, as lenders have different definitions of what makes up a good credit score.
That being said, the ranges below will give you the best estimates:
- Excellent: 750+
- Good: 700-749
- Fair: 650-699
- Poor: 600-649
- Bad: Below 599
As was mentioned above, these are general ranges. When it comes time to work with a lender, the way they process and factor in your credit score into their loan process differs from company to company.
Overall, a good credit score will never hurt you.
How Do You Determine Your Credit Score?
It’s important to take a look at your credit score, even if you’ve always paid your bills on time. The only way to truly know where you stand is by actually getting a credit check. There are plenty of options out there. However, a good source is from credit.com, they offer a free credit report once a month.
Most credit reports will also give you recommendations on how to improve your credit score, if your credit score needs improving.
What Is The Credit Scoring Process?
Credit scores are based upon complex mathematical models that are drawn from the data in your credit reports. There are a variety of factors that go into your score, including: your payment history, debt levels, account ages, and more.
A credit score is essentially a summation of you credit history, and illustrates a prediction of how you will handle credit in the future.
What Are The Benefits Of Having A Good Credit Score?
Having a good credit score makes your life easier, especially in the financial arena. If you’re looking to borrow money for a home, a car, any big purchase, or are trying to open a credit card with a lower interest rate, having good credit will go a long way.
Having bad credit hurts you especially in regards to interest rates. If you have bad credit and take out a large loan, you could end up paying thousands, if not hundreds of thousands more, over the course of your loan.
I hope you’ve found this article valuable and have a better understanding of the basics behind your credit score. Your credit score doesn’t have to be a mystery, the better you understand your credit score and history the more control you’ll have of your financial future.