What Credit Scores Are Good?

Knowing your credit score can be an important consideration in trying to get a loan. The higher your score, the more likely it is that you'll get a loan at the best possible rate. Having a low score means some lenders will not loan you money, or if they do, they'll charge you a higher percentage than someone with a better score.

Importance

In today's society, having a good credit score is important. Business is conducted electronically, and accessing information is a commonplace occurrence. Some businesses will base a hiring decision on your credit score, and attempting to make any kind of large purchase without having a good credit score can cost you thousands of dollars in paying an increased interest rate. Before you can get a mortgage loan or lease a car or rent an apartment, you should know your credit score is going to be examined.

Score

There is no one right answer when it comes to what makes a "good" credit number. Different lenders have different numbers. In addition, as economic conditions change, the idea of what makes a good credit score number changes, as well. In 2009, according to Steve Ely of Equifax, one of the three major credit reporting companies, a "good" credit score is 720, while "very good" can range from 725 to 759, and everything above 760 can be considered "excellent." These numbers can change depending upon the economy. In addition, different companies have different scoring systems. When a credit score is given to a mortgage lender, different criteria are examined as opposed to when it is given to a consumer checking his credit score. The mortgage lender usually requires more in-depth numerical data than the individual does.

Score Improving

There are ways to improve your credit score. Whenever you pay off a debt or lower your balance on your credit cards, this directly affects your credit score. For example, when you keep your balance on your credit cards under 50 percent of your credit limit, your score will be lower than if you maintain a high balance. When you decide to get rid of a credit card, don't close out the older card. Instead, shut down the newer one. Part of credit scoring is factoring in how long a credit account has been open. The longer it's been open, the better your score. If there are any outstanding debts owed, pay them off as soon as you can. Also, if you're looking to get your score higher, don't try to get any more credit cards. Whenever you try to get a credit card, that counts against you.

Considerations

Although it is helpful to know your credit score, lenders do not have to tell you what score they require to do business with you. So, even though you might have a score of 750, a company that wants to only lend credit to someone with a score of 760 or higher isn't required to do business with you, nor do they have to tell you their scoring requirements.