This archive report was first published on 20 October 2019.
Published on October 20, 2019, credit scores have become a crucial aspect of our financial lives. They are numbers that reflect one's likelihood of paying back credit, and lenders use them to determine the level of risk in lending to a specific borrower.
Why Credit Scores Matter ¶
Having a good credit score is vital because it opens doors to various financial opportunities. It improves the chances of getting a loan to buy an apartment, a car, or accessing certain services such as medical care.
What Constitutes a Good Credit Score? ¶
For a score with a range between 300-850, a credit score of 700 or above is generally considered good. A score of 800 or above on the same range is considered excellent. Most credit scores fall between 600 and 750, with higher scores representing better credit decisions and making creditors more confident that one will repay their future debts as agreed.
Factors That Affect a Credit Score ¶
- Payment history for past loans and credit cards, including the number and severity of late payments
- Type, number, and age of credit accounts
- Total debt
- Public records such as bankruptcy
- Number of new credit accounts recently opened
- Number of inquiries for one's credit report
Improving Your Credit Score ¶
- Paying all bills on time
- Getting credit for making utility and cell phone payments on time
- Paying off debt to avoid defaulting on some of them
- Keeping balances low on credit cards
- Only opening new credit accounts when needed to avoid creating too many hard inquiries on your credit report and reducing the temptation to overspend and accumulate debt
For more information on credit cards, visit What You Need to Know About Credit Cards.
