What Is a Good Credit Score? Why Is It Important?

Credit scores can have a profound impact on our finances. For example, a good credit score could mean better terms on your loan. It could also be the difference between being approved or denied for a loan in the first place.

When we talk about credit scores, there are typically two significant players, FICO and VantageScore. Each uses similar factors to determine your credit score within their system. Let’s go through all the in’s and out’s of credit and how it can affect your finances.

What Is a Credit Score?

A credit score is a number ranging from 300 to 850 to help lenders determine the likelihood that you’ll pay your loan back to them. Lenders will consider your score when applying for a credit card, mortgage, auto loan, or even by a landlord when you are looking to rent a property.

Many factors can impact your credit score. Some more than others, but each aspect is just a piece of the puzzle when lenders look at the risk level associated with lending you their money.

What Factors Impact Your Credit Score?

 Some common factors when determining your credit are: 1. Paying Your Bills 2. Your Debt 3. Credit Card Usage 4. Credit and Loan Applications

When determining your credit score, FICO and VantageScore will not take the following factors into account: 1. Age 2. Race 3. Religion 4. Nationality

Factors That Don’t Impact Your Credit Score

How Do I Get My Credit Scores?

You can get a full credit report from each of the three credit bureaus once per year from AnnualCreditReports.com. Reviewing your credit report each year is an excellent way to find discrepancies or wrong information that may be hurting your credit score.

A FICO score is typically a score in the range of 300 – 850. A “good” FICO score lies between 670 and 739. In 2021, the average  credit score was 716, which falls into the “good” range according to  FICO.

What Is a Good Credit Score – FICO

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