Good and Bad Credit Scores
Before we venture into good and bad credit scores, let’s first understand what is a credit score. So, a credit score is a barometer to gauge how reliable or risk free are you from a money lenders point of view. This score is expressed by a single number.
A credit score is determined by a a few small credit reporting agencies in the United States who are responsible for extracting information of financial nature with respect to you. The way they go about this is by seeking financial information from companies offering financial support in terms of loans, credit cards etc. The only concern of these agencies is:
Good credit cards
- The amount of money you have borrowed.
- The amount of debt you are in.
- Whether you have been clearing your payments.
Then these agencies collect this information from all the companies you owe money to and calculate your good and bad credit scores. The three most significant agencies in the US are:
This is the range of credit scores from good and bad credit scores:
- Excellent credit: 781 and above
- Good credit: 661-780
- Fair credit: 601-660
- Poor credit: 501-600
- Bad credit: 500 and below
About good credit scores
A good credit score is a credit score that ranges from 661 and above. If you possess such a credit score, you are perceived by money lenders as trustworthy and this may benefit you in ways more than one. You may find it much easier to get personal loans, car loans, mortgages and insurance with lower interest rates as well as you can land your dream job or start a small business. This is because your credit score will speak for you to money lenders.
A citizen with a good to excellent credit score is perceived as one who clears his/her loans on time, has a stable financial life and has no debts. This in exchange instills a sense of trust in money lenders and people with whom you may even want to start a new business with. Although different money lenders have slightly varying criteria for what they consider a good credit score or whether you deserve a loan, there is a set standard in general which decides what sort of loans a person with a certain credit score might get. For example, an individual with a fair credit score may get a personal loan but may not get a low interest mortgage.
About bad credit scores
A bad credit score is one that ranges from 501 and below. Citizens possessing such a credit score are perceived by creditors or money lenders as a very risky affair. This would make your life real tough since no money lender would be willing to lend you any loan because it would seem as though you are high on debt, are financially unstable and do not clear your payments on time.