The question of what is an excellent credit score plagues tens of thousands of people the world over. A person’s credit score will determine if he or she can get a car loan, mortgage loan, student loan or even a payday loan. Furthermore, an individual’s score will have a large bearing on how much interest a person will be charged on a loan. Following is some important information on credit scores with which every person who uses credit should be familiar.
Credit Companies
There are various credit companies and each company has a slightly different credit measurement system. The FICO system is the most widely used. The system rates credit on a scale from 300 to 850; the higher the score, the better credit a person has. Generally speaking, excellent credit is a score from 760 on up.
However, other companies have slightly different ratings. The Credit Sesame scale is used by Experian; this system defines an excellent score as a score of 740 or more. Many companies classify a score of 720 and above as “golden”, meaning that a person who has a score of 720―739 can get the same benefits and low interest rates as a person who has an excellent credit score.
How to Improve a Credit Score
Improving a credit score is very doable. The most important thing is to pay all credit bills on time and in full. Being a responsible credit card user ensures good scores. It is also important to use credit cards often, as those who do not use credit do not have the opportunity to prove that they are responsible credit card users.
At the same time, credit companies sometimes make mistakes that can lower a person’s score. A person who suspects that he or she has an unfairly low score should ask each of the three major credit companies for a credit report. This report should be gone over carefully and any mistakes should be reported to the credit bureau.
Credit can be ruined by making large purchasing and not paying them back, foreclosure and bankruptcy. However, it is possible to rebuilt credit and earn a good score again. To do so, a person should get a store credit card or some other limited form of credit and then use it to make small, manageable purchases. Paying off these purchases on time will steadily rebuild a person’s score.
The question of what is an excellent credit score is a bit tricky to answer. Generally speaking, a score of 760 or more is excellent; however, the standard of excellence does vary depending on which credit bureau a person uses. Lenders may also have different standards for what they consider to be an excellent score. The good news is that a score of 720 or above usually enables a person to get the lowest possible interest rate on a loan. Furthermore, there are always things that a person can do to improve his or her credit rating and gain a desired score.
