A credit score is a numerical value that is based on your credit report that you can get from a credit reporting bureau. This credit score can be used to identify credit worthiness of a person. There are various ways of analyzing what is considered a good credit score.
Credit Score Range
The credit score takes a value between 300 and 850 that is obtained by analyzing your credit report and a statistical calculation that is used to determine the number of times a person will default a loan payment if he or she avails a loan. The average credit score ranges between 680 and 700. If you want your credit report to reflect what is considered a good credit score, you must try and make your credit score be as high as possible. The ideal value for a good credit score is set to be 720 by the credit reporting agencies. However, the criteria that actually determine a good credit score depends on the lender from whom you avail credit and the scoring system used.
How to Improve
If you have a really low credit score, you must make attempts on improvising this score. This is not as difficult as it sounds. Following a few simple steps can help you obtain what is considered a good credit score. Remember to pay your bills without delay. When you default your payments, your credit score will start dipping and showing up to be really low. If you are not able to make payments on time, work out on a suitable payment arrangement with the person you have to pay your bills.
Clear your debts as soon as possible. Pay your credit card bills on time. If you are not able to make the full payment in a single installment, make sure that the balance to be settled on your credit cards are as low as possible. Avoid winding up unused accounts as a zero balance can enhancing your credit score. Also, do not open new accounts if you have had credit problems before. Reduce the number of installment loans in your name. The lesser the number of loans, the higher are the chances of improving your credit score.
To enhance your credit score, refrain from those activities that lead to a hard pull as they can cause an adverse effect on your existing score. A hard pull or hard credit check occurs when you allow a lender whom you approach for credit to view your credit history. Each time a hard check is performed on your credit history, your credit score reduces by five points. It is worthwhile noting that getting a hard check done on your credit history is often in your control. Thus, this is purely a voluntary action.
Benefits
A good credit score allows you to make a normal down payment and make periodic nominal interest rate. Also, a credit score determines whether are eligible for applying for a loan that you wish to avail. A good credit score indicates high chances of you being able to avail the loan.
When you obtain what is considered a good credit score, your financial life is without doubt more secured than in case of a poor credit score. Even if you have continuously maintained a good credit score and experience a sudden dip in this score, you can work towards enhancing this score once again. You can also analyze your credit reports carefully to make sure that the decline in your credit score is not due to a scam.
