13 Tips to Increase Your Credit Score
August 23, 2021
WHY IS IT IMPORTANT TO HAVE A GOOD CREDIT SCORE?
October 20, 2021

If you thought the grades were only about class, think again. According to professionals working at Credit Repair Service Georgia your credit score is like an adult score, but it is based on your creditworthiness. And just like grades, having a better credit score will help you get ahead in life.

Whether you need to score a residential mortgage , buy a car , get a credit card , refinance student loans, or rent an apartment, it’s all based on your credit score. If you’re unfamiliar with credit scores and how they affect almost every aspect of your financial life, here’s an introduction.

What is a credit score?

Your credit score is a three-digit number calculated based on your credit report. When applying for credit, lenders check your credit report and the corresponding score to determine if you are worth loaning the money.

This is the easiest and easiest way for lenders to find out if you are worth the risk to lend money. A bad credit score could mean either being denied a loan or facing a higher interest rate. A great score means you pay less interest since you have proven that you are responsible for the credit.

Why are credit scores important?

Your credit score determines your credit health. Whenever you want to get a credit card or apply for a loan, expect a credit check. If you have an uneven credit history riddled with late payments, defaults, and high credit usage, you may not be approved for future credit options.

How are credit scores used?

Whenever you want to borrow money, lenders will check your credit score. Think about:

  • Auto and auto loans
  • Mortgages
  • Personal loans
  • Student loans
  • Credit card
  • Some apartment rental applications
  • Some job verification procedures

If your credit score is bad or even fair, your credit or loan application could be refused. Or if you are approved, you might face higher interest rates than those with good or excellent credit.

What is a good credit score?

According to Credit Repair Professional USA, the higher the three-digit number, the better your credit score.

There are different models of credit scoring, and different rating agencies and credit bureaus use different models. FICO and VantageScore – the two main credit scoring models – range from 300 to 850.

300-579Very poor
580-669Just
670-739Well
740-799Very well
800-850Excellent

For FICO scores, a good credit score is between 670 and 739. For VantageScore, a good credit score is between 661 and 780.

VantageScoreEvaluation
300-499Very poor
500-600Poor
601-660Just
661-780Well
781-850Excellent

How are credit scores calculated?

Credit scores are calculated based on your credit report on everything from payment history to different types of credit usage. Here’s how FICO breaks down its score:

Payment History, 35%: The on-time payment history is the primary determinant of your credit score. Creditors want to know if you can repay the money you owe on time each month and until your repayment is complete.

Amounts Due, 30%: If you are maxing out your credit cards each month, the amount you owe – or credit usage – is high. This tells lenders that you have a lot of consumer credit and that you are a risky borrower.

Length of Credit History, 15%: This is how long you’ve had credit on your behalf. If you’ve taken out student loans for college, it matters and could give you a longer credit history than you think. It’s not just about opening accounts; closed accounts are also calculated.

New Credit, 10%: When you apply for a new credit card or loan, it can give your credit score a boost. Keep in mind that a difficult credit check will cause your score to drop temporarily. It will rebound in a few months, provided the minimum payments are made on time each month.

Credit Composition, 10%: The variety of credit you have available tells lenders that you can handle different types of accounts. While it doesn’t carry as much weight as other factors, it’s still a piece of the credit score puzzle.

Need more details on what your credit score is or you need help in fixing your credit score? The best tip that I can give you is to get in touch with Certified Credit Counselors. They will evaluate your credit and give you the best possible options and help. You can book a free consultation with some professionals by going to the Macwell Solutions’s website by CLICKING HERE.

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