A credit score is an important eligibility criterion for getting a credit card. The higher your credit score, the more choices you get in terms of credit card types. Similarly, having a poor credit score limits your options significantly. Before understanding what a good credit score is, a person must understand the concept of a credit score completely.
Let us discuss everything you need to know about a good credit score:
What is a Good Credit Score?
A credit score is a numerical number ranging from 300 to 900 indicating a person's creditworthiness. A credit score is calculated after looking at a person's bill payment history, credit utilization ratio, credit history, etc.
An outstanding credit score ranges from 750 to 900 points. Candidates with credit scores in this range are preferred by banks, NBFCs, and other online lenders. Most credit products will be available to you if your credit score falls within this range.
How to maintain a good credit score?
- Timely Bill payments: To build a credit score and maintain it consistently, you should always pay your credit card bills and other dues on time. Not doing so can result in interest accumulation and an increased credit burden. Paying your credit card bills on time will increase and maintain your credit score.
- Multiple Credit Card application: You should refrain from applying to multiple credit cards as applying for many credit cards simultaneously will indicate to creditors that you are credit-hungry. There will be a credit inquiry when you submit a loan application. Frequent loan applications give lenders a negative view of the applicant, which increases the chances of loan refusal.
- Do not reach your credit limit: Excessing your credit limit has various drawbacks. It not only lowers your credit score, but it also results in an over-limit fee, the cancellation of your credit card, or a reduction in your credit limit. To avoid any such disasters, it is prudent not to exceed your credit limit.
- Review CIBIL Score report: A CIBIL report contains all information regarding your credit score. It is important to review your CIBIL Report periodically to check for any errors and take rectifying action immediately to avoid any serious future pitfalls. This will help you in improving your credit score significantly.
- Maintain a healthy Credit Mix: Make sure that you have a healthy credit mix of secured and unsecured credit to minimize your risks. The sorts of credit accounts you have — mortgages, loans, credit cards, and so on – are referred to as your credit mix. It's a component that's usually taken into account when determining your credit ratings.
- Do not close old credit cards: If the credit card is one of your credit report's oldest accounts, canceling it will reduce the average age of your credit history and lower your credit score. It is good to have a long credit history for a good and improved credit score.
Additiona Reading - Your Complete Guide To Using Your Credit Cards
Criteria for a Good Credit ScoreNowadays almost all business uses the FICO system to make the lending decision quick and proper.
Although 670 isn’t necessarily bad credit, it won’t be enough for a high-end condo rental or mortgage.
However, your credit score does follow you around everywhere you go.It decides whether you can get a loan to buy a car or house.
It can even affect whether you get a job or a promotion.Bad credit is like a black cloud hanging over you everywhere you go.
A FICO score under 630 is considered as Poor Credits An average or Fair score is between 630 and 690Good Score is between 690 and 720An excellent score is anything above 720You’d be surprised how many people contact me with no understanding of what their credit score is.
You may save thousands of dollars in interest with a mortgage if you have a good credit score.Why Having a Good Credit Score is ImportantWhen you have a good credit score you can get the following benefits easily1.
