The credit score is a measure of a person’s credit files. These records are analyzed and measured by government recognized credit bureaus. What is a good credit score? and how does it help? Credit score usually in measured on a scale of 300 to 900. The credit score for an individual with less than 6 months of a bank account is 0 and the credit score for an individual with no credit history is -1. It takes about 18-26 months to build a credit score by credit usage. As in most scores, the higher the credit score, the higher credit the holder can avail. It is all about credibility.
A good credit score builds the trust of money lenders and allows you to take loans depending upon your credit score. Lenders nowadays get your credit score from more than one sources and it is important that you have a good record on all of them. Good credit building practices will ensure that your credit files and history are recorded by these sources. Money lenders make a quick reference of the credit score range that you fall into and the credit score is only one of many factors they assess before lending money. There are credit scorers who assess your credit score based on job stability, background and the market at large in the near future before money is lent.
A credit score below 500 or 600 is considered “very bad”. Being in this credit score range limits your options terribly and lenders who specialize in this category alone may lend loans. You could have a difficult time gaining insurance. Poor credit scores are usually a result of debt, collection amounts and irregular payment of bills. One must focus on reducing or clearing debts, elimination of collection amounts and clearance and timely payment of bills. If none of this is the case, and your credit score is still low, it is possible that there is little or no credit report on the basis of which to build a credit score. This can be remedied by contacting a credit counselor.
600 to 649 is considered a poor or bad credit score. This score again is a reflection of hardships in life and may be a result of the same tendencies as a very poor credit score. People with this credit score will be bound by the lender’s terms and conditions and may need a cosigner and/or down payment or collateral. Mortgage loans are probably out of reach. Insurance companies may offer a limited range of products and services.
650 to 699 is a fair or average and acceptable credit score. This is a crucial score range to be in. Creditors look for why your score is what it is. Whether you are a slow builder or got there because of late payments while being in the good range. This could lead to higher interest rates and expect higher fees, collaterals and down payments. This credit range may also lead to employers employing you for jobs with lesser responsibilities. You have little to worry, if you are consistent and stick to timely payment of bills and keep your debts low, you will soon climb up to the good credit score range for greater benefits.
700 to 749 is a good credit score range. This range may not be treated like VIPs, but life is fair enough.
750 and above are very good to excellent scores to be in with well-managed finances, good credit history, a stable job and source of income are all a green signal to availing that loan or credit you seek.