What’s a Good Credit Score?
Having good credit is pretty important especially when buying anything that requires collateral since it always requires good credit. Some examples would be when purchasing a car or house because if you don’t repay the loan timely, your car or house can be repossessed by the bank. But how does credit play a role? Well, depending on your number, provided by the top 3 credit bureaus: Experian, TransUnion, and Equifax, it means you’re more or less reliable or risky. So, depending on your number and risk level, your interest rate will be vary. Generally, good credit equals less interest and easier in getting a loan. How much difference can a excellent credit score make? Apparently, a lot! Forbes Advisor says that even “the difference between good and excellent is significant.” For example, “someone with a score in the 680-699 range would have a mortgage rate approximately 0.399 percentage points higher than a person with a 760-850 score. In 20-years, someone with a 680-699 score will still pay over $20,000 more in interest on a $244,000 mortgage than a person with a high score.”
So what’s a good credit score? Equifax says:
740-799: Very good
From my own experience both from life and as a bankruptcy lawyer, most people are between 620-750. Anyone under 600 quickly can climb above 600 in a matter of months with good payment history, but it’s extremely hard getting above 800. I’ve found that the best way to boost your credit score is to consistently make more than the minimum payments without default and to pay off loans to close out the outstanding accounts.
So, in the end, a good credit score is pretty important unless you have so much cash, there’s no need to borrow. Now, wouldn’t that be nice?