It’s important to check your credit score from time to time. But, you should also know what these scores mean so you are able to take the necessary steps to either improve or maintain your score. Here’s how your credit score could affect financial options.
Poor: 300 to Low-600s
A credit score that’s between 300 and the low-600s is considered poor, and you may not be able to get approved for an unsecured credit card or loan. Even if you do find a lender or credit card provider who is willing to approve your application, it is likely you won’t be getting the best possible rates.
Fair to Good: Low-600s to Mid-700s
Credit scores that are between the low-600s and mid-700s are considered to be in the fair to good range. While you are a lot more likely to be approved for a financial product with a score in this range, keep in mind that it’s important to shop around and compare your options, whether it is a credit card or a loan. That said, you may not get the best terms.
Very Good: About Mid-700s
Anything over the mid-700s is considered very good. Of course, if your score is closer to 850, it will be considered excellent. With a credit score over the mid-700s, lenders will likely offer you the most competitive rates and you shouldn’t find it hard to get approved for top credit cards. That said, if you are applying for a loan, it’s best to ensure that you have a low debt-to-income ratio as well, so you have a better chance of getting the lowest possible rate of interest.
Understanding Credit Scores
Many people assume they have only one credit score. But, you, in fact, have multiple credit scores. This is because multiple credit-scoring models like the VantageScore and FICO exist so you have a separate credit score based on each model. You will also have a special insurance credit score.
Factors That Affect Your Credit Score
A few factors that affect your credit score are things like your payment history, the length of your credit history, credit mix, the amount you owe in total, and the recent applications for credit products. If you want to bring about a positive change in your credit score, you’ll need to work on these factors.
