A credit score is a number that ranges from 0 to 999 and represents a person’s creditworthiness. A borrower’s credit score improves the way he or she appears to potential lenders. A credit score is calculated using information from your credit histories, such as the number of accounts you have available, the total amount of debt you owe, and your repayment history, among other things. Lenders use credit ratings to assess the likelihood of a borrower repaying a loan on time.
A person’s credit score may determine the size of an initial deposit needed to receive a mobile, cable service, or utilities or rent an apartment. And lenders look at borrowers’ credit scores all the time, particularly when determining whether to charge a credit card’s interest rate or credit cap.
What is a good credit score?
A credit score of 881 or higher is usually considered good. It can result in a borrower earning a lower interest rate, resulting in them paying less money in interest over the life of the loan because your hard-earned credit rating would provide you with better rates and discounts on credit cards, mortgages, credit agreements, and loans.
The credit reporting agency determines a good credit score. Equifax, Experian, and TransUnion all make it fairly straightforward to determine whether or not you have a decent credit score after you receive your credit report. They use a conceptual scale of bands ranging from very poor to excellent in each case.
You will see where you fall on the scale until you know your ranking. Below-mentioned is an example of Experian:
|Excellent||961 to 999|
|Good||881 to 960|
|Fair||721 to 880|
|Poor||561 to 720|
|Very Poor||0 to 560|
How to improve credit score?
1. Register yourself on the electoral roll
Getting on the electoral roll is one of the simplest ways to improve your ratings. It is completely free to register on the About My Vote website; however, you will most likely be denied credit if you do not do so.
2. Reveal that you are financially stable
Managing your debts well is, of course, the easiest way to increase your credit score. Make sure you don’t miss any monthly payments, pay on time, and remain within your credit cap.
3. Review your credit report once a year
Every year, review your report to ensure that all of the information kept about you is accurate. And, of course, correct any errors you find.
4. Old accounts should be closed
Even if you have no outstanding balances on your credit cards, the lender will review all of your available credit before deciding on your application.