You probably know how important it is to have a good credit score. But what qualifies as, “Good?” How do you make sure you get – and keep – yours in the best possible range? AOL.com breaks it all down:
What is a good credit score?
While there are a variety of credit scoring systems out there, and your score can vary among them, the main players are FICO and VantageScore.
VantageScore and FICO scores range from 300 to 850. The higher your credit score, the better it is…
FICO defines a good credit score as one that falls between 670 and 739, whereas anything above 800 is considered excellent. FICO credit scores between 740 and 799 are very good…
VantageScore 4.0 (the newest VantageScore credit scoring model) ranges from 300 to 850, much like FICO. This method of scoring defines 661 to 780 as a good credit score and 781 to 850 as an excellent credit score.
How to get a good credit score
Improving your credit score begins with knowing what your credit score is. You have the right to a free credit report from each of the three credit bureaus (you can request your reports at AnnualCreditReport.com), although that doesn’t give you a credit score. You can find out your credit score from the credit bureaus, or FICO, for a fee…
Here are a few steps you can take to get a good credit score:
- Pay your bills on time. Payment history is the most important factor that makes up both your FICO and VantageScore, so you should aim to never pay bills late. You can improve your score by always paying your bills on time and in full each month. If you miss a payment, it can linger on your credit report for up to seven years.
- Keep your card balances low. Credit utilization is another important factor in determining your credit score under any model. Experts suggest keeping your credit utilization at 30 percent or below. However, keep in mind consumers with excellent credit scores tend to have a credit utilization rate in the single digits.
- Try to avoid closing old credit accounts. Keep your accounts open and let them grow with you. Old accounts help add length to your credit history, so keep old accounts alive and in good standing. Closing an account cuts the amount of credit available to you, which drives up your utilization and ultimately dings your score.
- Make sure your accounts are being reported to the credit bureaus. If you only have a few credit accounts, make sure those are being counted toward your overall credit score. For example, if you are an authorized user on someone else’s credit card, make sure you’re actually benefiting from being on the account. Alternatively, a history of on-time rent and utility payments can really boost your credit score without much hassle. You may need to use an alternative reporting service, such as Experian Boost, in order to add these accounts to your credit history.
- Limit credit inquiries. When you apply for new lines of credit, a hard inquiry is applied to your credit report. While this only dings your credit score a tad, you don’t want to apply for a ton of new credit cards all at once. Do thorough research when you are on the market for a new credit card, and be sure to only apply for the one that will best suit your financial needs.
You can read more here, and learn about the factors that affect your credit score.
A strong credit score can help you qualify for a credit card, loan, or mortgage with lower interest rates and more favorable terms. So if you are considering applying for financing, you’ll want to make sure your credit is in order first.