What is an Excellent Credit Score?
Generally speaking, the higher your credit score the greater your chance of securing a loan or credit card with the most favorable terms and conditions.
An excellent credit score is one that falls into the 720 to 850 range. With a score in this range, lenders realize that you have a strong history, you pay your bills on time, and you aren’t saddled with too much debt. While your credit score is important to your overall financial health, lenders look at other things to consider if you truly have an excellent credit rating.
These details include but are not always limited to:
- If you have defaulted on a loan
- If you have filed for bankruptcy
- If you have made late payments on loans or credit cards (especially in the last year)
Why is Excellent Credit a Big Deal?
If you don’t have an excellent credit score you may begin to wonder if it’s really that big of a deal.
Your credit score doesn’t impact everything in regards to your finances, but it can come into play when applying for a loan or credit card.
Here’s the most important thing to remember: excellent credit improves the likelihood of qualifying for a loan. Since you’re considered a low risk borrower, lenders are more willing to do business with you.
Also, don’t overlook the fact that excellent credit puts you in position to receive the lowest possible rate. This allows you to save money over the course of your loan.
Take a personal loan, for example. With excellent credit, you may qualify for the lowest possible rate, which could be somewhere in the five percent range. Conversely, if you only have a fair credit score your rate could be much higher, sometimes 30 percent or more.
Tips for Achieving an Excellent Credit Score
It’s not impossible to achieve an excellent credit score. Even if you’re a long way off, there are steps you can take to make progress as the days go by.
- Pay down outstanding debt as quickly as possible
- Don’t take on too much debt
- Never make a late payment
- Be aware that too many hard inquiries can harm your score
By following these tips, you can watch your credit score slowly increase. Once it reaches 720, you can look back at all your hard work and realize just how much progress you’ve made. From there, stick with your plan as to maintain your excellent score into the future.