What Can I Do With Good Credit – Why is credit so important & How Good credit can make you & Save you a lot of money 💰🤑
What Can I Do With Good Credit – 9 Quick Tips For Finding The Best Company
This video I spoke on why is credit so important & How Good credit can make you & Save you a lot of money. If you have a good credit score, you’ll almost always qualify for the best interest rates, and you’ll pay lower finance charges on credit card balances and loans. The less you pay in interest, the sooner you’ll pay off the debt, and the more money you’ll have for other expenses.
What is a good credit score?
What is considered a good credit score? According to the FICO credit scoring model, credit scores fall into five distinct categories:
Poor credit: 300-579
Fair credit: 580-669
Good credit: 670-739
Very good credit: 740-799
Excellent credit: 800-850
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Benefits of good credit
There are many benefits to having good credit. Landlords are more likely to rent you an apartment, for example—and if you’re job hunting, you might benefit if your employer reviews your credit as part of the hiring process. That said, the biggest benefits of good credit are all financial. Here are three ways in which good credit can make your life both easier and more affordable.
Easier credit approval
If you have good credit, banks and lenders are more likely to approve your credit applications. This means that when you apply for credit cards, loans or mortgages, you’ll be more likely to be accepted (and you might spend less time waiting to hear the results of your application).
Lower interest rates
In addition to having higher credit approval rates, people with good credit are often offered lower interest rates. Paying less interest on your debt can save you a lot of money over time, which is why building your credit score is one of the smartest financial moves you can make.
How to get good credit
If you want a good credit score, you need to understand how credit scores are calculated and how to build credit.
Your FICO credit score is made up of the following five factors:
Payment history: 35 percent
Credit utilization: 30 percent
Length of credit history: 15 percent
Credit mix: 10 percent
Recent credit inquiries: 10 percent
If you want to get your credit score into the good credit score range, you need to improve your credit habits as they relate to those five factors.
Since payment history makes up 35 percent of your credit score, try to make all of your credit card payments on time, every time. Missing a credit card payment can have serious negative effects on your credit score, especially if you don’t make up the missed payment as quickly as possible.
Your credit utilization ratio reflects how much of your available credit you’re currently using. If you want good credit, try to keep your credit utilization below 30 percent of your available credit. If you have $10,000 in available credit, for example, try not to let your total credit card balances exceed $3,000. If your credit card balances go past that 30 percent mark, pay them off as quickly as possible—that way, those high balances will have less of an opportunity to lower your credit score.
Length of credit history
Lenders like to see that you can manage credit accounts responsibly over a long period of time. This is why it’s a bad idea to close old credit cards, even if you’re no longer using them. Your credit report only tracks active credit accounts, and when you shut down your oldest credit accounts, you shorten your credit history. If you want to build good credit, keep your credit cards open.
The different types of credit accounts under your name account for 10 percent of your credit score. If you have both revolving credit (like credit cards) and installment credit (like a mortgage or a car loan), your credit score might increase by a few points. However, you can still build and maintain a good credit score even if you only have credit cards, so don’t worry if you don’t have much of a credit mix yet.
Recent credit inquiries
Every time you apply for a new line of credit, the bank or lender conducts an inquiry into your credit history. Having too many recent credit inquiries on your account can negatively affect your credit score because applying for a lot of new credit at once is a risky financial behavior. If you’re trying to build good credit, try to wait three to six months between credit card.
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