So you want to know what is a good credit score, now that is an important question. Whether we like it or not, the world does indeed revolve around money. We like to earn more than we need for our basic needs to lead a comfortable life. The additional money makes us feel confident and good too. We like to own things and go on vacations, and we might have to take a loan too so that we can meet our aspirations.
But earning money is just half the story. You must be good in payments too – your credit card bills, utility payments, and also the money towards the loan repayment. That’s because, if you default or delay the payments, it is going to go against you. Your credit score will drop, and the next time you need money, you are going to face a difficult time.
What is a Good Credit Score?
All of us have a credit score, and all of us should know what our scores are. But that is not enough. You should know what is a good credit score, because this will let you find out whether your individual score is good or not.
The credit score range is between 300 and 850, and there are various segments in between. A good credit score is a score on the higher side. To have a good score, your score must be above 680, and anything above 760 is adjudged to be a great score. If you are slightly lower than 680 that would also do. But do ensure that it is never lower than 620. Between 620 and 679, you have an average score, and though your loan application will probably be approved, but your terms might not be very favorable.
Your Credit Score Depends On the Following Factors
Have you ever wondered on what basis the agencies calculate your credit score? Here’s how it is calculated.
- Payment history – 35% of the value of your score will come from this. So if you have a history of late payments, it is likely that it is reflecting poorly on your score. You can however improving it by building a history of timely payments.
- Utilization – 35% again. This denotes how much credit you have used, and how much remains.
- Credit history – The length for which you have an account open will be accounted here.
- Inquiries – Have you applied for credit before, and been rejected. All these things will come in here.
- Credit type – What kind of credit have you taken before will be analyzed.
Finding out what is a good credit score is, and your position, is a good starting point to try and improve your own score. You must always try to get it as high as possible.