When it comes to your financial life, perhaps no number is more important to you than your credit score. Credit scores are determined by summarizing your credit history and financial decisions. If you have an excellent credit score, it can significantly improve your financial situation and give you benefits that those with lower ratings cannot obtain.
What is an Excellent Credit Rating?
A credit rating is typically synonymous with a score that is calculated using the formula from the Fair Isaacs Corporation, which is known as a FICO score. The scoring system that is used by the major credit bureaus starts at 300 and goes to 850. In today's lending market, an excellent credit score would usually need to be at least 750.
What Does an Excellent Score Do for You?
An excellent credit score can help you in a number of areas in your financial life. When you apply for a loan, you should have no trouble getting approved as long as you have some kind of income. Besides making it easier to get approved, you can also get the best interest rates available. When you apply for a loan, you may also not have to provide as much documentation. You can even get lower rates on your insurance premiums with an excellent score.
Getting an Excellent Score
If you do not have a great credit score currently, it does not mean that you cannot get one in the future. The credit scoring system is dynamic, and your score changes frequently. If you want to bump your score up to a higher level, you should start making all of your payments on time, as this is one of the most important variables when calculating your score. You should also try to pay off any credit balances you have, such as credit cards or store accounts.
Improving Great Score
Once you get to a certain point with your credit score, it is pointless to continue trying to improve it. Lenders do not give you any better of a rate once you get up into the excellent threshold. For example, once you get up above 760 points, you do not need to spend your time trying to get up above 800 because it will not save you any money on interest or make it easier to get approved for a loan.
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