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What Qualifies as a “Good” Credit Score

On Behalf of | Jan 28, 2013 | Consumer Protection

A credit
score
is a number that potential creditors use to determine the likeliness of paying off
one’s debts.  Every consumer with credit has a credit score
which is determined based on the information reported on your
credit report.  A credit report is run through an algorithm
that calculates several factors in a credit report to produce a
score.  That number can obviously change on a month-to-month
basis as creditors update information on a consumer’s
account.  While more than one scoring model exists, the FICO
score is the most widely used in in the industry.  A FICO
score ranges from 300 to 850 and the higher the score the
better.

The average consumer falls somewhere between 600 and 750 and
anything above 700 is considered “good” credit while scores below
600 suggest you may be a credit risk and have poor credit
management skills.  If your score falls above 720 you will
likely receive the best interest rate when applying for credit
while on the contrary scores below 600 will likely award you a
credit denial or an excessive interest rate.

The most significant factor in decreasing your credit score is
late payments or your payment history.  In order of
importance, when calculating your credit score credit bureaus
consider payment history, amount owed, length of your positive
and/negative credit history, new credit and the type of credit
used.  These factors are combined and weighted to determine
your score.  An excellent score is somewhere between 750 and
850; a good score between 700 and 749; fair between 625 and 699;
poor between 550 and 624; and a bad score is 549 and below.
As a rule of thumb a credit score of 700 or higher will generally
earn you any credit you apply for, but may not get you the best
interest rate available.

Unlike your credit report, which you are entitled to one free
copy annually, usually you have to purchase your credit
score.  You may purchase your score either through myfico or by
visiting the three major credit bureaus websites.  Having a
good credit score can be the difference between saving thousands of
dollars instead of making heightened interest payments that you
would not have had to pay otherwise.  If you plan on making a
big purchase in the upcoming future, start now in increasing your
credit score so you are able to obtain the lowest interest rates
available.  Tips on increasing your credit score are making
sure you pay all of your bills on time, making sure your report
reflects only accurate
information
about you, not applying for unnecessary credit and
not using up all of your credit
limits.

SmithMarco, P.C. has been protecting
consumer rights since 2005 and handles Fair Credit Reporting Act
cases.  If information about you is inaccurately being
reported, or if you feel that you’re rights have been violated,
please contact us for a free case
review.

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