Credit score—that phrase always comes up when you look at your finances. It is two small words, yet it has such a tremendous impact. A credit score shows how you have performed financially. Your performance throughout your credit history can influence your future opportunities.
Therefore, the battle rages between an excellent credit score and a low credit score. It is imperative that you come out victorious with a good credit score because bad credit might be like an anchor, weighing you down and hindering you from getting things such as an auto loan, home loan, or credit card.
The top way to safeguard your retirement is to open a precious metals IRA. Check out the below providers and request a free kit.
Best Overall Rating (Where I Invested)
#2 American Hartford Gold
Best Buyback Program
#3 Augusta Precious Metals
Most Educational ($50,000 Minimum)
#4 Noble Gold
Best Metals Selection
A credit score is a numerical expression based on the analysis of a person’s credit history. This number illustrates the financial reliability of an individual. Credit scores are based on a credit report that has information sourced from credit bureaus.
The score range is from 300 to 850. A popular model used to measure good credit is the FICO score. Based on this metric model, a poor credit score is below 580. An average credit score is between 6oo and 750. A high credit score is 800 or more. (Learn the benefits of an 800+ credit score here.)
The Impact of Credit History on a Credit Score
A credit history is a record of how an individual has managed their credit accounts. Having a good credit score shows a person’s ability to manage their finances responsibly, while a bad credit score shows the inability to pay their bills and manage their debt.
The impact of credit history on a credit score is significant because scores are based on factors such as payment history, outstanding debt, the span of credit history, types of credit accounts, and applications for new credit.
Therefore, it’s important to have a good credit history. Maintaining good credit is up to you. You can take action, such as keeping credit card balances low.
How to Get and Keep Good Credit
It might be hard to get a perfect credit score of 850, but good credit scores are achievable. Listed below are ways to ensure you get better credit reports:
Monitoring your credit regularly helps give you a big-picture view of your overall financial health.
Paying bills on time will contribute significantly to a good score.
Keep existing accounts open and active.
Limit applying for or opening new accounts.
The Benefits of a Good Credit Score
A strong credit score is an essential part of a healthy financial life. It can open up a range of benefits, such as faster loan approval, a utility company not requiring a security deposit, or credit card companies offering you their best rates.
Higher Credit Limits
After you have proven that you are creditworthy, potential lenders may lend you more money if it’s within your budget.
Interest is the cost you pay for borrowing money. A good score qualifies you for low interest on nearly every kind of personal loan or other credit. Lenders recognize you are a responsible borrower and may offer lower interest rates. Paying a lower interest rate over time is good news. You might save money in the long run.
Boost in Negotiating Power
A high credit score gives you the power to bargain for a lower rate on a new loan or a credit card.
The Bottom Line
What is a benefit of having a good credit score? It makes life easier. Nearly every facet of your financial life is impacted by the strength of your credit score, from loan and mortgage applications to leasing a new apartment. Lower credit scores may cause some financial struggles.
Potential lenders, employers, landlords, property management companies, and more will do a credit check. Therefore, maintaining a good credit score is crucial.