Many lenders and potential employers look at your credit score to determine your creditworthiness and financial history. FICO credit scores fall between 300 and 850. An excellent score, 750 or above, will help you get the best loan rates, and possibly a job.
Interest Rates
An excellent credit score is an effective bargaining tool when shopping for a loan. The lender will look at your proven ability to pay bills on time as a strong indication you will continue to do so. As a reward for excellent credit, expect to be offered the lowest market interest rates, which could save you thousands of dollars over the course of your loan.
Excellent Credit Factors
Although the formula used to create credit scores is not public, there are five main categories that determine your credit score. Thirty-five percent of your credit score is devoted to payment history. How you utilize the credit you have counts for about 30 percent. Fifteen percent is devoted to how long you've had credit. Credit inquiries and your type of credit each make up 10 percent.
Rebuilding Your Credit
You can raise your credit score by following some simple rules: Pay all of your bills on time. Use credit wisely and sparingly. Don't carry high balances on your credit cards. If they have high balances, work on lowering the amount you owe to 1/3 of your total credit limit. With time, your credit score will rise.
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