How to improve and maintain good credit. Must watch for young adults!
What’s a Fair Credit Score 2020?
Having a good credit score is essential to unlock access to mortgages, auto loans, credit cards, and other forms of credit. A fair credit score can range from 580 to 669, according to the FICO scoring model. This score is considered to be “fair” because lenders view it as an acceptable risk level when it comes to lending you money.
What is a Credit Score?
Your credit score is a three-digit number used by lenders to measure your risk level when it comes to borrowing money. This score is based on the information in your credit report, which is a detailed report of your credit history. It is generated by the three major credit bureaus: Experian, Equifax, and TransUnion.
FICO Scores
The most commonly used credit scoring model is the FICO score, developed by the Fair Isaac Corporation. This scoring model ranges from 300 to 850, with higher scores indicating a lower risk to lenders. A score of 580 to 669 is considered to be a fair credit score.
The Factors That Impact Your Credit Score
Your credit score is determined by the information in your credit report. This includes factors such as payment history, credit utilization ratio, length of credit history, types of credit, and recent credit inquiries. Each of these factors has an impact on your credit score, so it’s important to understand how they can affect it.
Payment History
Your payment history is one of the most important factors when it comes to your credit score. This includes whether or not you have made your payments on time, and whether or not you have any past due payments. Making all of your payments on time is the best way to maintain a good credit score.
Credit Utilization Ratio
Your credit utilization ratio is the amount of credit you are using divided by the total amount of credit you have available. It is important to keep your credit utilization ratio low, as having a high ratio can have a negative impact on your credit score. Aim to keep your credit utilization ratio below 30%.
Length of Credit History
Your credit history is a record of your past and present credit accounts. The longer your credit history, the better your credit score is likely to be. This is because lenders want to see that you have a long and consistent history of managing and paying off your debts.
Types of Credit
The types of credit you have can also impact your credit score. Having a mix of installment loans, such as auto loans and mortgages, and revolving credit, such as credit cards, is ideal. This shows lenders that you can handle different types of credit responsibly.
Recent Credit Inquiries
When you apply for a new line of credit, it triggers a “hard inquiry” on your credit report. This can have a negative impact on your credit score, so it’s important to only apply for credit when you need it.
Key Points
• A fair credit score is considered to be between 580 and 669 according to the FICO scoring model.
• Your credit score is based on the information in your credit report.
• Payment history, credit utilization ratio, length of credit history, types of credit, and recent credit inquiries are all factors that can affect your credit score.
• Making all of your payments on time, keeping your credit utilization ratio low, having a long credit history, having a mix of installment and revolving credit, and only applying for credit when you need it are all ways to maintain a good credit score.
People Also Ask Questions
Q1: What is an excellent credit score?
A1: An excellent credit score is considered to be a score of 750 or higher according to the FICO scoring model.
Q2: How do I improve my credit score?
A2: To improve your credit score, make all of your payments on time, keep your credit utilization ratio low, have a long credit history, have a mix of installment and revolving credit, and only apply for credit when you need it.
Q3: What are the benefits of having a good credit score?
A3: Having a good credit score can help you unlock access to mortgages, auto loans, credit cards, and other forms of credit. It can also help you get lower interest rates and better terms on loans.
What’s a fair credit score 2020? – Whats The Best?
Good credit is so important. And not impossible to achieve. Here’s how!
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