Knowing how to read your credit score and understanding it, is the first step to improving your score or maintaining it if it’s already in a healthy condition.
What Is A Credit Score?
A credit score is a number range from 300 – 850 that lenders use to help asses the level of risk associated with borrowers. Some employers, the landlord’s as well as insurance companies also use a credit score to make decisions about job applicants, potential tenants, or policyholders. Your credit score comes in as a plus, when you are applying for a mortgage, a car loan, a credit card, or any other loan. It can save you money if it is high or cost you money if it is low.
The higher your credit score, the better your credit is. Here are some credit score ranges.
Above 750: excellent credit
700-750: good credit
650-700: fair credit
600-650: bad credit
Below 600: very bad credit.
High credit scores mean bills are being paid on time and available credit are being used responsibly while avoiding major credit blunders. Best rates and most rewarding perks are offered by lenders to borrowers with the highest credit scores because they represent a low-risk. Borrowers with lower scores carry more risk for lenders, which results in higher interest rates if they get approved.
Having a history of missed payments impacts negatively on credit score as such carrying high credit card balances. Defaulting on loans can drop scores hundreds of points to a level where lenders are unlikely to give approval to an application no matter the terms.
Credit Card Use
Irresponsible use of credit cards can be a quick medium of damaging your credit. Almost one-third of your credit score is dependent on how you use your credit. This measures how much of your available credit you actually use.
Carrying balances greater than 30% of your available credit is viewed as poor utilization of your available credit while keeping your total balances below that is viewed as responsible card usage. One of the quickest ways to improve your credit score can be by paying down your credit card balances and keeping them at an acceptable level.
Tips On How To Make Good Use Of Your Credit Card
It is best to pay off your balances every month to avoid interest charges.
Ensure you use your cards only for purchases you can afford with cash.
Once your card is maxed, it eliminates one of the key benefits they offer: the ability to pay for unexpected car repairs, medical bills, necessary travel, etc.
How To Get Your Credit Score
Your credit score can be ordered via the information from your credit report from a variety of sources. Your credit score can be checked for free from services like Quizzle.com, Credit Sesame.com, CreditKarma.com WalletHub.com, and LendingTree.com. Also, some banks, credit unions, as well as credit card issuers make your credit score available either on your billing statement or online. You can purchase as well your full credit report from any of the major credit bureaus like Equifax, Experian, and TransUnion.
Understanding Your Credit Score
Since your credit score comes as a number, to understand it, some companies offer a gauge that will help you read your credit score. This gauge, helps you understand whether you have good or bad credit and the factors that influence your credit score. These companies will highlight the things that dragged your score down or things that have improved it. It is advised you monitor your credit score regularly to know how you fare.