What is Considered a Good Credit Score For You?

Posted: 24 Aug 2008 | Categories: Credit

Do you know what is considered a good credit score? The credit scoring system in the U.S. is quite complex. This article will try to break it down for you.

What is considered a good credit score? Well, here are the broad brush strokes: anything above 760 will get you the best credit offers. If you have a score between 620-760, you will be able to qualify for credit, but it gets more expensive the lower you go. If your credit score is under 620, you will probably have trouble qualifying for credit, and if you do it will be at very high interest rates.

There are three credit reporting agencies - Experian, TransUnion and Equifax. Each of these agencies will have a slightly different score because not all creditors report everything to all bureaus.

However, they all use the FICO scoring system. This system is based on the following criteria:

?35 percent - Payment history
?30 percent - Credit utilization ratio
?15 percent - Length of credit history
?10 percent - New accounts
?10 percent - Type of debt

As you can see, the two biggest factors are whether you pay your bills on time, every time, and how much of your revolving credit (credit cards) you have charged at any one time.

The factors which are also of note include how long you have had any credit, whether you have new accounts (old accounts are better), and the type of debt you have (installment debt is stronger than revolving debt).

So, when you consider what is a good credit score, you have to figure that higher is better.

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Claire_Hendley