What's a Good Credit Score - Analysing What's a Good Credit Score | Credit Score : Free Credit Scores and Credit Reports Online

Most people ask this question before renting a new house or before applying for a loan. Credit scores are not arbitrary numbers and building a good credit score is not a matter of a few days work. There are a number of factors which have taken into consideration when evaluating your credit score.

What’s A Good Credit Score – How are Credit Scores Determined?

Listed below are the chief factors considered when assigning a credit score and what qualifies as a good credit score.

History Of Payment – It is your payment history that makes up more than one third of your credit score. A few late payments on your credit card would not do much harm to your credit score. However, more than a few can land you in hot water. When you consistently pay your dues and bills late, you are considered to be a slow pay or a habitual late.

Outstanding balances – Nearly 30 percent of your credit score is made up by outstanding credit balances. It is recommended therefore that when you near the upper limit of your credit, pay immediately. Even in the case of a financial or medical emergency, pay your dues as soon as possible because being close to your credit limits destroys your credit records irrevocably.

Duration of Use of The Credit Accounts – The amount of time for which you have used your credit accounts determines nearly 15 percent of your overall score. In some cases people with credit accounts find it easier to get loans than people who have not used credit accounts at all. Note however, that those who have used credit accounts in the past have to pay a high amount of interest.

Application For Additional Credit – When you apply for extra credit within a short period of time, it gives most lenders and creditors a bad impression.

Types of Credit – Having a healthy mix of credit types can impact your credit score positively. For instance an installment loan, credit cards and a mortgage is a good mix. However, too many modes of credit can do more harm to your credit score than good, for instance too many credit cards which have been maxed out.

Usually, 700 and above is considered to be an excellent credit score. Most lenders will have no problem with people who have such scores. Anywhere between 600 and 630 is just average, while 500 and below may be considered bad. Once you know the range that you’re targeting, you can easily determine what’s a good credit score for yourself.