What Is a Credit Score, and What Are the Credit Score Ranges?

September 22, 2020

A credit score is a three-digit number that shares your level of credit risk and how likely you are to meet your debt obligations. It usually falls within 300 and 850. A credit score is arrived at based on information in your credit reports such as payment history, the amount of debt that you currently have, and your overall history with debt.

 

A high credit score means that you have been responsible with your management of debt. Maintaining a high credit score will make lenders and other creditors much more willing to process your credit requests. 

 

What Are the Credit Score Ranges?

Here are the various credit score ranges and what they typically mean: 

300-579: A credit score that falls in this range is usually considered to be poor.

580-669: You are considered to have a fair credit score if you fall within this range. 

670-739: This bracket is where your credit begins to be seen as good.

740-799: If your score falls within this range, creditors will consider your score to be very good.

800-850: Achieving a credit score within this range is a huge accomplishment. Scores within this range are considered to be excellent.

 

What Affects Your Credit Score?

The two things that matter most when it comes to your credit score are: 

Covering your bills on time: To ensure that your credit score stays at a great range or to achieve a good credit score it is important that you pay your bills on or before their due date. If you fail to do this, you may face serious implications. If you are late by 30 days or more in paying for a bill, it will stay on your credit history for years.

The weight of your existing debt: Your overall use of credit has an impact on your credit score. The relation of your balances and your credit limit is considered when calculating your credit score. It is wise to avoid exceeding 30% of your credit limit. If you are able to keep it way below 30% that will prove beneficial.

Other factors that are considered include the length of time that you maintain credit, having diversity in your credit obligations, and how recently you have made a request for credit.

 

Final Words

Your credit score can make purchases and almost all other financial transactions either smooth or difficult. Take time to learn the different strategies involved in improving and maintaining an excellent credit score. Create systems to ensure that you remain consistent in all your debt obligations and you should be good where your credit score is concerned.

Rahul Iyer

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