The Importance of having a Good – Excellent Credit Score
THE WHY
Whether you want to face the reality or not, your credit score has a huge impact on your life. The perks are endless with having good- excellent credit; good interest rates for your mortgage, car and acquiring a personal and/or business loans are the most common perks of good-excellent credit.
THE DEFINITION
What is good-excellent credit?
FICO score is most commonly used amongst lenders. Therefore a FICO score of 670-850 is within range of good-excellent. There are multiple ways to check your credit score, However I suggest usingMyFico.com
THe HOW
How is my credit score made up?
Your credit score is based on five categories:
- Payment History (Attributes to 35% of your Credit Score)
- Credit Utilization (Attributes for 30% of your Credit Score)
- Length of Credit History (Attributes to 15% of your Credit Score)
- New Credit Inquiries (Attributes to 10% of your Credit Score)
- Mix of Accounts (Attributes to 10% of your Credit Score)
TIP!
These categories are aggregated from your credit report which you can obtain for free by visiting Annualcreditreport.com. You can get your credit report for free once a year. The site is authorized by the Federal law, so it’s legit and trustworthy.
THE PROCESS
How you can build a good credit score?
To build a good – excellent credit score, you’ll need to;
1. Keep your debt balances below 30%
2. Make sure all necessary payments are made on time
3. Make sure the credit you currently have contains installment and revolving loans
4. Prevent closing accounts
THE BENEFITS
What can you do with an excellent credit score?
Better credit card rewards: Some companies will give you no annual fees, cash back and other benefits. Moreover, you can get credit card churning and lots of bonus points for your purchases too.
Qualifying for a mortgage, car loan, business loan, Etc. Moreover, an excellent credit score can also have a positive impact on your job search as some employers will look at your credit report to determine if you are an organized person that always pays his/her debts on time. This can bring in a major advantage on your resume.
Lower interest rates for investment. As a result, an excellent credit score can help you create a good investment portfolio and earn/save money with lower interest rates. There are also instances where Insurance companies will offer you a lower rate if you have no loan and credit issues.
There are tons of benefits to harness if you have an excellent credit score. Even if it seems like a tough objective, it’s something doable, Make sure that you properly manage your debt, and use financial literacy as a guideline at all times. Make sure to drop your email address below to receive notifications from Ms. Business101 on Credit tips, financial literacy, business tips, and so much more. Also follow me on Instagram, I am always dropping gems to help you level up personally and professionally.
