Understanding what good and bad credit really is
To understand where you stand in regards to your credit score and rating, the first thing you must consider is
the score in which you currently sit. Credit scores start at 300 being the lowest you can possibly recieve, to 900
being the highest.
The average score for American citizens today is actually around 680, so if you do check your rating and find it
to be lower than this, then you should look at improving it.
A good score that will make you eligible for better interest rates and approvals on loans is actually around
720, so this is the number that you ultimitely should be aiming for.
The things that you should avoid if you would like to retain a good credit rating and score are things such as
paying bills late, opening multiple accounts and quite obviously, declairing bankruptcy.
On the other hand, if you would like to improve your credit score, you should look into spreading your finances
and credit across a broader range of channels such as car repayments, mortgages and any other loans that you may
have. This will ulitimately create a better and more attractve credit history and potential lenders will see you as
a lower risk customer, trustworthy of prompt and full repayments.
What does my credit score mean and how is it calculated?
Your credit score is actually a calculation of your credit worthiness, based against all the other people who
have credit in the respective county or state. This is displayed in a numerical format and just this number alone
can make or break your financial stability from one day to the next. If your credit rating is considered low, this
can cause quite a few problems as a denied application can result in refusal for school loans, mortgages, car
repayments and all the nessecary amenities that we need to survive. A low score will present potential creditors
with the impression that you are a liability and lenders do not often take risks, unless the financial gains are in
their favor. With a low score, you may still be accepted, but this will come with some very heavy strings attached,
usually in the form of high interest rates and strict terms and conditions.
Who is eligible to see my score?
To obtain a copy of your personal credit rating and score, potential lenders and creditors will apply to any one
of the three profit-making agencies that gather and collect your information. When you apply for a loan at the
bank, they will obtain your credit report, before they are willing to consider your application. Other people that
may want to see your credit score and ratings are people such as car dealers, credit card companies, private and
public lenders and basically anyone who is considering lending you money via credit. Whilst you will be checked by
most people, some do not and you may simply be interviewed. These are precisely the types of people that you need
to avoid at all costs as it is only the professional and honest lenders that require reassurance on their side
before an application is accepted.