Finance

Know More: How to Get a Good Credit Score

Every person over the age of 18, who has used any form of credit tool, has a credit score that falls in the range of 300 to 850. These three digits play a huge role in determining if you qualify for the best credit cards, competitive loan rates, and mortgages.

Every time you apply for a new credit card or loan, the lender reviews your credit profile, including your three-digit credit score, and determines your eligibility based on this information.

That magic number shows your lenders all about your ability to pay loans and if you are a potential credit risk, based on your payment history and credit history from current or past credit accounts.

There are two main credit scoring systems: FICO and VantageScore, and they aren’t created equal. FICO Scores are more valuable, as lenders pull your FICO Score in over 90% of U.S. lending decisions.

What Is a Good Credit Score?

VantageScore and FICO and the two main credit scoring systems used to calculate individual credit scores. Here is where you lie on the bad to excellent credit score based on your score:

FICO

Very poor: 300 to 579

Fair: 580 to 669

Good: 670 to 739

Very good: 740 to 799

Excellent: 800 to 850

VantageScore

Very poor: 300 to 499

Poor: 500 to 600

Fair: 601 to 660

Good: 661 to 780

Excellent: 781 to 850

If you plan on taking out a loan or applying for a new credit card, be sure to check your credit score in advance. If you have bad or fair credit, you can still do some damage control and raise it to a decent level by following these simple tips:

Make Your Payments on Time

Your payment history is the most important factor when it comes to calculating your credit score. It helps determine how quickly you pay back your debts. One easy way of avoiding late payments is by setting up autopay with your bank.

Pay in Full

While paying the minimum amount due may seem like a convenient way to get by, experts recommend paying your bill in full to bring your credit score up.

Avoid Opening Too Many Credit Accounts at Once

Every time you apply for a new credit card or loan, an inquiry appears on your credit report that reduces your credit score by about five points. Even though it bounces back in a few months, you should try and avoid too many applications as it could hurt your credit score.

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