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The FICO credit score is what most lenders and financial institutions take into account when assessing lending risks and evaluating loan applications. It also determines the interest rate the applicant will have, the sum of money he will be loaned and the maximum loan length he will be able to choose. In other words, the credit score represents a consumer’s creditworthiness. Your credit score will mostly depend on your credit report and your credit history and will most certainly determine your future loan deals.
Many people believe that having a low credit score qualifies as some sort of sin and often feel ashamed of their apparent lack of money management skills. Thinking this way is downright ridiculous and a simple waste of your time and energy. You should not feel like a looser simply because your credit score is less than perfect, bear in mind that there are thousands out there like you and that this low score does not define you are a person. What is more, you can always bounce back from a less than favorable credit standing and your financial life can blossom. Keeping a positive attitude is key in these situations.
What Does A Good Credit Score Entail?
The first step towards achieving a high credit score is knowing exactly what it involves. How can you achieve your goals if you do not exactly know what those goals are? Good question.
Before I even attempt to answer this question I want you to keep in mind that each lender has his own creditworthiness standards. What qualifies as excellent credit for a particular lender might only be considered as good credit for another. So, this being said, let us move on.
Generally, there are several factors which combine to create a good to excellent credit score. Following, I will name the most important factors for you to have a clear idea of what you should aim for:
1) A good credit score is that one which is above 680-660. If an excellent credit score if what you have in mind, you should aim for a 750 or higher score. On the other hand, a score lower than 620-600 is considered poor. Fairness of credit stands between a 600-680 score.
2) You should have a established credit history. What does this mean? Your credit history should at least have 24 months worth of records. If this is not your case, you should consider starting to build this history.
3) Having revolving lines of credit is a must. It does not matter the type, it could be a simple credit card or a more complex line of credit such as a home equity line of credit or a business line of credit.
4) Your credit history should have varied loan records. Usually, it is preferable for the consumer to show records of different types of personal loans such as auto loans, mortgage loans, student loans, equity loans, etc.
5) There should be no negative inputs related to late payments. It is not difficult to always make your payments on time if you are organized.
6) Last but not least, a good salary and a stable job come into the playfield. These are not a must, but always help.
I hope you have found this guide useful and interesting, strive for the best and you will obtain it! |
