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Articles » What Is A Good Credit Score | | Why Is Having A Good Credit Score So Important? |
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Your FICO score from the credit bureaus is the single most important number when it comes to determining your credit worthiness with banks, mortgage brokers, credit card companies, and automobile finance companies. In order to be financially successful and secure, you will need to have good credit. The FICO scores for each bureau will vary a little because they use different versions of your credit report, but the industry standard threshold for a “good” credit rating is 660. Anything from 620 to 659 is considered “fair” and anything below 620 is classified as a “poor” credit score.
Credit scores are calculated based on the information contained in your credit report . The big three credit bureaus, Experian, Equifax, and TransUnion, collect both good and bad information about your credit history and publish it in a form that is accessible by lending agencies. When you go in to apply for a loan or mortgage, this score is the first thing that the lender will look at. Unless you plan on paying cash for everything in life, you will need a good credit score.
There are certain lenders that will give you a loan or mortgage with a lower credit score , but you end up paying a lot more in the long run. Interest rates on these “low credit score” loans are generally very high and could send you even further behind if you are struggling financially. A couple of points on a $100,000 mortgage could translate into a payment over $200 a month higher. This extra money is taken away from your net worth with no real return, since it is interest and not applied to the principle.
Paying your bills on time and established good spending habits early in life is the key to building and maintaining a good credit score. You will be able to do more and be financially successful if you pay close attention to this three digit number. If you don’t know what it is, you can purchase it from any or all three of the credit bureaus at any time. There are even free trial offers where you can get your credit score for free.
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