Credit scores are report cards of financial standing of a person. Credit score ranges from 300 to 850. Anything under 650 is not considered to be a very good credit score. Anything above 650 and above is considered to be a good credit score. The higher the score, the better it is. Good credit score proves your creditworthiness to potential lenders, banks, landlords and others.
Did you know that having an account go to a collections agency is a blemish on your credit report that stays there for up to seven years?
Where Can You Get Your Credit Report and Score for Free?
There are 2 major reporting agencies— Equifax and TransUnion
One can get Credit Report for free from these agencies. But credit reports don’t include your actual Credit Score. To get the credit score, you usually have to pay.
What’s a Good Credit Score?
Here’s what credit scores can mean for your personal finances:
300-580: Either credit is denied or is approved for the very highest rate of interest
581-650: Qualify for credit at high interest rates.
651-710: Qualify for credit at moderate interest rates.
711-750: Qualify for credit at very competitive interest rates.
751 and up: Most competitive, lowest interest rates on the market.
Someone with a credit score of 550 might be charged an interest rate that’s three to four percentage points higher than someone who scores over 750. That could translate into paying several thousand more dollars in interest for a $20,000 car loan or over a hundred thousand extra bucks in interest over the life of a 30-year $200,000 mortgage! That’s money you could invest for your retirement instead.
Damaged credit score can always be improved within 30-60 days. Below are certain tips to improve a damaged credit score.
- Review and understand your credit report thoroughly. Make a plan yourself or seek someone’s advice on how to repair your damaged credit scores
- Start paying your bills on time. You can set your bills up for automatic withdrawal from your checking account. If you have overdue bills, make plans to get them caught up
- Start paying your credit card balances. Reducing your overall debt on your credit report is a very effective way to improve your credit score. If needed, take a small loan from a family member or friend. It will help your credit score get a quick boost.
- Keep using your older credit cards. The issuer will not stop reporting your information to the credit bureaus. Longer the credit history, better will your score. Therefore, remember that hanging on to older cards is always a good idea.
- Avoid maxing out your credit cards. Try to keep your balances below 30% of your credit limit—even if you pay them off in full each month. For example if you have a card with a $5,000 credit limit, don’t rack up a balance that exceeds $.