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What is a good credit score?

What is a good credit score?

If you're worried about your credit score, that's probably a good thing. After all, your credit score can affect your ability to get a mortgage, personal loan or a car loan. And even if you're able to qualify, your credit score will determine the interest rate you'll have to pay. Furthermore, your credit score can play a part in whether or not you're required to pay deposits on apartments or to utility companies. And according to Smart Credit, employers can use your credit report to help determine whether or not you're the best person for the job. If you weren't worried about your credit score before, you probably are now. So, what is a good credit score anyway?

Determining your credit score

Your credit score is a number that is determined using data compiled by the three credit reporting agencies: Equifax, Experian, and TransUnion. With credit scores ranging from 300-850 (using the FICO scale), there is definitely a large range of scores that fall into the various categories of credit worthiness. According to Experian, most credit scores fall in between 600-750, with a score over 700 usually signifying good credit management. The credit reporting agencies look at things like whether you've had a late payment, the total and type of open credit accounts, your total debt and public records in order to decide your credit score. Since anything over 700 is generally considered a good credit rating, there is a small amount of room for error on your part.

Improving your credit score

If you order your credit score and find that it's lower than you had hoped, don't despair. According to Smart Credit, you can improve your credit score easily just by following a few simple steps. First, you should focus on paying all of your bills on time and in full. Second, it's important to make sure that you're not using more than 10 percent of your available credit at any given time. And finally, don't open new accounts unnecessarily, and don't close old accounts unless you have to. As long as you make financially sound decisions and follow these steps, you should be able to slow nudge your credit score in the right direction.

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