Credit score

A good credit score: what is it and what does it mean? | Opinion

I am often asked what a good credit score is. Having a good score is important, but managing your finances, setting goals, and living within your means are just as important. There is no absolute standard that creditors use to approve or deny credit. However, credit score is used by creditors to determine your ability to repay a loan. Staying informed and making better financial choices is the best strategy for increasing your score.

Having a good credit score is important because it affects many aspects of our daily lives and can determine our quality of life. A good credit rating takes time and patience. Whether you decide to rent or buy a home, landlords and mortgage lenders generally require a good credit score. Even potential employers, insurance agents, debt collectors, utility companies, and government agencies use your credit history as a way to gauge character and responsibility.

*Pro Tip: Whether you’re planning a major purchase or applying for a loan, don’t close a credit card account within six months of applying. You want as much credit history as possible to boost your chances of approval.

A high credit score often qualifies you for lower interest rates on loans, helps you obtain additional credit, and opens the door to better opportunities to acquire the goods and services you desire.

A new product has been introduced to “boost” your credit score instantly. This product takes information from your bank statement such as on-time payments to your utility company and cell phone bill payments and incorporates it into the formula that calculates your credit score. This information is not normally reported on a consumer credit report. This is just a new tool made available to the consumer to help them increase their low score.

Now let’s get to the numbers.

• 750-850 is considered an excellent score. With a score in this range, you will most likely be offered lower interest rates, a better loan product, you can live in more affluent areas, and enjoy lower insurance rates.

• 651-749 is considered good. Within this range, you can still get great deals, but with slightly higher interest rates and limited access to better financial products.

• 600-649 is considered fair and 300-599 is considered poor. If your score falls into one of these two categories, you will have significantly higher interest rates or risk being denied credit.

It’s true that your credit score measures your creditworthiness, but your credit history tells the whole story of your financial dealings. If your score isn’t exactly where you want it to be, it’s not too late.

As I mentioned before, you can increase your score by paying your bills on time, using credit only when needed, limiting how often you request new credit, using less than 30% of credit you have and by checking your credit file. for errors or misinformation. Working with a credit counselor like me can also improve your ability to access that elusive 850 credit score that so many of us so desperately desire.

An advisor can help organize your finances by helping you create a budget, reviewing credit reports, and setting financial goals. They can also explain the different types of loans and how to establish credit. If you would like assistance with any of these services, please email me at [email protected] or call 662-624-5776.

Until next week, stay financially fit!