Making Your Credit Score Better

So you have requested and received a copy of your credit report, which also contains your credit score. Knowing your credit score is one thing, but what does it mean? What is a good and a bad credit score?

Credit scores range from 300 to 850 and everywhere in between. 850 is the highest score that you can have, and 300 is at the lowest end of the spectrum.

Having a credit score of 300 means that you will not be able to secure credit from a lending institution, and that you have a long way to go until you will be able to. Even some insurance companies check credit scores these days when trying to ascertain your risk factor, so having a decent credit score is an important thing.

Any score up to 559 will make it difficult, if not impossible to obtain credit, especially now, when lending institutions are becoming more stringent about whom they lend to. Anywhere between 560 up to 619 will make it difficult, but not impossible to secure credit. If you do obtain credit with a score this low, you will most likely be paying much higher interest rates, which can cost you a lot more at the end of the day.

 A score between 620 and 679 will give you a much better chance of securing credit, but you will still be charged at a higher interest rate. A good score is considered to be between 680 and719, and with a score like this you should have no trouble accessing credit.

Anything higher than 720 up to 850 means that you should not only be able to obtain credit, but also access lower interest rates, which can save you thousands if you are making a big purchase, such as a house.

Small Improvements

If your credit score is low then there are steps that you can take to improve it. The first thing to do is to clear up any outstanding debts. Paying off bad debt will improve your score. If you have any loan agreements, make sure that you make the payments on time and in full.

If you don’t have any loans you can either take out a loan or hire purchase for an amount that is easy for you to pay off, and make these small regular payments to give yourself a positive credit history. By raising your credit score you will give yourself a much better chance of securing credit when you need it in the future.