Category: Credit Restoration

5 Tips for preventing a bad credit score

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5 Tips for preventing a bad credit score

5 Tips for preventing a bad credit score

No one plans a bad credit score, it’s just that life sometimes throws a curveball to you where  your credit history ends up badly damaged. Usually, it’s repeated mistakes that lead to low credit  scores. And protecting your credit score does not seem to be a big deal till you find it’s time to  borrow some money.  So here are some tips which should help protect your credit score and prevent a bad credit score.

1. Keep ‘Good’ credit accounts open

You generally think it’s better to close credit accounts which you don’t use often. However  before you do this, it’s better to first take a look at the account. If you have an account with a  history of payments made in full and on time, it’s better to keep such accounts open as it  provides a history that proves you can pay your debts responsibly. In fact, it will help your credit  score for as long as you keep it without operating it.

2. Close all small loans, credit cards and credit lines

Cleaning up your credit report by paying off and closing small balances on open credit products  helps prevent a bad credit score. Pay emphasis to the accounts with a history of late payments  and other problems as these accounts can damage your credit score as they show your  irresponsibility at making payments. Moreover, it’s difficult keeping track of so many small  accounts when life gets busy, and can lead to more missed payments.

3. Apply for credit after your credit score improves

New borrowers with credit for a short time of less than 2 years will have a low credit score as  you don’t have sufficient history to prove you are a responsible borrower. If you think opening  additional credit products even if you don’t need them will help improve your credit score, you  are wrong. Only apply for credit required and do not look for additional credit till your score  improves as open credit balances affects your credit score. If you are in need of secured cards please visit our Building Personal Credit page

4. Be punctual with full payments

Falling behind on monthly payments to lenders, landlords and utility providers can tarnish your  credit score as they regularly report to the credit bureau. Their word affects your score, and if  you are late with payments, your score will start dropping.

5. Close revolving balances

The proximity of your revolving balances like credit cards and credit lines to your credit limit  can prevent your score from slipping. Do whatever possible to keep your credit balances below  your limits preferably using just 30-35% of your available credit. Payment delays leads to  interest charges and missed payment fees which not only has a negative effect on your credit  score, you may have to pay an additional fee to your creditor.

 

So just take responsibility of your finances and improve your wealth management with the help of these 5 tips to avoid getting a bad credit score. It’s good not only for your current financial standing, but also for getting a future mortgage or car  loan.

Need Help?

If you still need help with controlling your debt and/or improving your credit, fill out the form below and get a free credit consultation from a credit expert at Better Qualified.


Multiple Credit Card Applications Can Affect Your Credit

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Multiple Credit Card Applications

It is true that you need to get credit to build a good credit score and this can be done by getting a credit card and using it responsibly. However, making various credit card applications in a short  span of time can also damage your credit score. The reason multiple credit card applications affect your credit score is because 10% of your FICO credit score is determined by new credit inquiries you make. Each time you make an application,  your credit is checked by the creditor to decide if your credit card should be approved. This  leaves an injury to your credit report which is included in your credit score.

Various Applications Hint Desperation

Multiple Credit Card Applications Hint Desperation

Consequently, the more credit card applications you make, the more your credit score drops. So as 10% of your credit score is affected by a new credit application, your credit score can fall as  much as 70 points if your credit score is 700. Then again, it also depends on the other information in your credit report. If your credit score  isn’t affected by the various inquiries, there is a chance of creditors denying your application  only because you had recently made various applications. This is because multiple applications are considered to be a sign of desperation for credit, where  desperation is always a turn off. While most people can regain these points within six months of applying for a loan or credit card application, the points may really count for those who had a poor credit score to begin with.

Makes You Look Like A Financial Risk

Opening numerous credit cards in a short time span is a negative indicator of a person’s financial  responsibility. This leads to a negative impact to your FICO score as it indicates you are a  financial risk. As your FICO score predicts how dependable you are with borrowed money, showing any  behavior which is correlated to mismanaging of credit is reflected with a drop in your credit  score. However, if you have already made the mistake of applying for many credit cards at once,  responsibly managing these multiple accounts leads to a quick re-bounce of your FICO score. This is done by paying bills on time and keeping balances below 30% of available credit. Unfortunately, data collected over the past few decades prove that this is not the case most of the  time, and those consumers who open various accounts in a short span of time end up running up  balances and missing payments.

Need Help?

If you still need help with controlling your debt and/or improving your credit, fill out the form below and get a free credit consultation from a credit expert at Better Qualified.


Credit Restoration 101

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1. Make A Plan And Stick To It.

You must be serious and committed to making changes in your lifestyle – changes that will bring financial peace of mind. Above all, restrict yourself to absolutely necessary purchases. Borrow wisely. The two most important questions to ask yourself: “can I afford it?” and “do I really need it?” As tempting as it is to cut up all of your plastic, you must maintain responsible credit card use – your new payment history will gradually rebuild a better credit rating for you.

2. Prompt Payment Of Bills.

Especially of credit cards, is the surest way to repair your credit rating. As you have discovered, we leave “financial footprints” for all to see. Payment of our bills, both amount and timeliness, are tracked by credit rating agencies such as Equifax Canada and TransUnion of Canada.

3. Say No To Grace Periods When Offered By Credit Card Companies.

It’s hard to resist such offers, and because your budget is light, you naturally want to “legally” skip payments — but don’t do it. It’s a bad credit habit; only a financially strapped customer would fall for this, and you no longer want to send out that kind of message. Pay at least the minimum balance if you are really tight, but ideally you want to pay above that.

4. Always Try To Pay More Than The Minimum Balance Due.

Not only does it polish your credit rating, but it also saves you a lot of money in interest, and makes a huge difference in your eventual goal of debt retirement. A key credit skill.

5. Keep Your Balances Low.

This is an important strategy, and one that will reflect well on your use of credit. You want to keep your balance way below the credit available to you.

6. Don’t send out financial distress signals.

Avoid excessive inquiries for credit. Do not use credit from one company to pay off credit to another. The creation of multiple new accounts is another red flag that works against you.

7. Maintain and use between two to four cards.

Less that two and it takes longer to create a new payment history. More than four, and you look like you cannot manage your debt. Remember – responsible, steady, and reliable use of your cards is your first and best defense against a poor rating.

8. Try To Keep Your Oldest Most Established Credit Card Active.

The longer your history is with a certain company, the better it is for your credit rating. This is your most important account. If the interest rate is excessive, contact the company and explain your situation to them. Let them know that you are serious, and eager to maintain them as a creditor. Their goal is to keep a reliable customer, so make that work for you.

9. Slow and steady wins the race.

You’ll be rewarded for responsible longtime credit handling. Be patient — the passage of time will earn back your good credit profile.

Then, when you do need credit for a major purchase — such as a car or a house — it will be there for you. Once recovered, maintaining a good credit rating takes vigilance, but it’s worth the effort. You’ll be able to live and enjoy a financially stable life.

Unnecessary Transfer of Wealth

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My grandmother always told me, “It’s never about how much money you make, it’s about how much money you can save.” This coming from a woman who made the best of living on my grandfather’s meager wages. All I know is that she owned her own home, never wanted for anything, was never in debt and actually passed a decent estate onto her family when she passed. I can think of nothing more devastating than giving up our hard earned money unnecessarily, but it happens right under our noses every day.

If you want to save money, it’s worth considering practicing these habits where you can save about $100 every month. The important thing about this $100 bucks, is it can help eliminate debt and create additional income. All it takes are a few changes and it makes a great difference on how much money you waste every year.

  1. Improve your credit

 One of the easiest ways to start saving money is to improve your credit. We live in a credit driven world. Your credit scores can either cost or save you money. Lower credit scores can lead to higher interest rates, higher insurance premiums, and increased security deposits. Poor credit can actually cost you more than $100 a month. Some estimates in certain areas have the number as high as $300 a month.

  1. Coffee/Bagel

 If you stop on the way to work for a coffee and bagel or any combination of food and drink, you’re wasting a great deal of money. Most of us wind up with a half a cup of cold coffee and throw out half of what we were eating. Snacks are also a silent killer of wealth. Convenience stores and vending machines are just bad for your wallet.

  1. Unnecessary fees

This can be anything like late payment fees which also adds to your interest rates, to speeding tickets, parking fines, late fees and other convenience charges. All this account to lots of money through the year. Try to legally avoid these fees; most of them can be avoided just by paying on time or taking care of things yourself.

  1. Spoiled food

Make sure you cook as much as you require or else you will throw lots of food every month. Do not let food spoil or go to waste. You can either plan leftover nights or take leftovers to work or cook to feed less people. If you tend to spoil lots of food, change the way you shop and plan.

  1. Neglecting your property

Performing routine maintenance on your home, car, bike, and all of your property will prevent major expenses down the road. Clean and change filters, weatherize, and follow directions for maintenance on all of your belongings.

  1. Idle services

Check the subscription services you receive each month and decide if you will really use them or if you can live without them. Pay extra attention to recurring charges that you’ve put onto your credit card. These are “painless” but can really add up in the end. An example is a gym membership you don’t use or the cable bill, if you are hardly home to watch television. You can save money by cutting cable and using an alternative for your television and either start using your gym membership or look at alternatives like exercising at home or jogging around the neighborhood.

All of the little things add up to a lot in the end. Every dollar that you waste, you can’t pay down debt, invest, or save. There is a great book by Larry Winget: Your Broke Because You Want To Be. (see below) Read it for some additional tips on getting ahead.

Youre Broke Because You Want To Be

Need Help?

If you still need help with controlling your debt and/or improving your credit, fill out the form below and get a free credit consultation from a credit expert at Better Qualified.

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Credit Tips From Paul Oster “The Nation’s Credit Repair Man”

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Credit tips

Credit Tips To Help You Avoid Dangerous Mistakes

Credit cards help you easily and conveniently buy things you want (not necessarily need) and even help bail you out of a jam. Unfortunately all this comes at a price; moreover, uncontrolled spending and credit card use leads to various financial mistakes which come with long-term effects. While you may know the dangers of running up credit card balances, there are a few other dangerous mistakes you may make and some tips for avoiding them. These credit tips are even more important than ever coming into the holiday season.

Credit Tips PAYING THE BARE MINIMUM

PAYING THE BARE MINIMUM

While banks use different formulas for calculating the minimum amount due every month, most start with one or two percent of the outstanding balance. This is then added to fees for late payments, monthly interest charges and exceeding credit limit. Whichever way it’s calculated, just paying the minimum leads to lots of interest payments with time. Try to pay off as much of your balance, if not all every month.

LATE PAYMENTS

FICO states that payment history is the largest component, consisting about 35% of the score. This is sensible as lenders want to know how promptly their borrowers were at making payments in the past as no one likes getting paid late.
Not only do late payments lead to a low credit score (1x30day = 20-100pts), it also results in late payment fees from the bank. This not only costs you more but also boosts your monthly minimum amount.

HIGH UTILIZATION RATIO

Next to payment history, FICO checks the ‘amount owed’ which constitutes 30% of a credit score. This is calculated using the borrower’s credit utilization ratio or the amount of available credit used. So if you have card with a $6000 credit limit and you use $3,000, you have a 50% utilization ratio.

High ratios harm your credit score and affects your ability at securing loans on favorable terms. It also leads to less credit availability during emergencies. As high utilization ratio also indicates deeper financial problems, it’s time to do some serious budgeting if your ratio creeps up. On an average, Oster recommends, “keeping your utilization ratio below 30%.”

NOT READING YOUR STATEMENTS

As banks move towards paperless billing and automatic bill pay services, you may forget to check your monthly statement. This is dangerous as you may overlook some wrong charges and pay for services or products you haven’t bought. There is also a chance of you becoming a victim of identity theft or other forms of credit fraud.

Moreover ignoring your monthly credit card statement may lead to your losing command over your finances. This in turn may make it difficult for you to reach your personal finance goals. So make it a point to set aside a few moments every month to review your paper and digital statements and make it a part of your monthly budget review routine.

You will have to wait for the next post to learn about a few more credit card mistakes you should avoid making.

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If you still need help with controlling your debt and/or improving your credit, fill out the form below and get a free credit consultation from a credit expert at Better Qualified.

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The Walking Debt – A Guide to Eliminating your Debt

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If you’re like me, then every Sunday night you’re glued to the TV watching AMC’s The Walking Dead, hoping your favorite character isn’t the next to be killed off. The show focuses around a group of survivors constantly stressing over how they are going to overcome a growing zombie threat known as walkers. The stress of having crippling debt can give you a similar sensation as being surrounded by a bunch undead zombies. If the stress of debt is getting too overwhelming, consider trying cannabis vape carts to relieve some of your stress.

As of October 2015, the average US household had $16,140 in debt. That’s a pretty outstanding number! This is mainly because most consumers are in a state of debt denial. They know they have debt but they are not treating debt like a priority and continue to spend their money on unneeded luxuries. The result: their debt continues to grow and grow like a zombie horde.

Two of the biggest debt factors can be linked to poor money management and medical bills. Sometimes we make mistakes and pay for things when we don’t have the money to do so (something you should stop doing once you realize it.) Other times it might not be intentional. No one plans on getting sick or taking a trip to the ER. Although you may feel like you’re surrounded, debt doesn’t have to last forever. In this article I’ll supply you with the correct planning, ammunition, and faith to take on your walking debt!

Step 1: Locate and List All of Your Debt

Debt Survival Guide

Let’s begin with creating a debt survival plan. Like I said before, the creditors you owe are your enemies. They’re the zombies that are trying to do your bank account harm. Before we go and attack them we need to asses the situation. Much like a real apocalyptic invasion, we would never want to go out blind shooting in every direction. By that method you’ll do more harm than good. Ask yourself: “How many accounts are there? What are the balances? What are the APRs? (interest.)”

If you’re having trouble figuring this out then you may want to take a look at your credit report. Credit reports will generally report all of your debt, which will give you a bird’s eye view of every account that needs to be paid off and eliminated. You can get a free credit report each year by visiting annualcreditreport.com. This report won’t give you your score, but it will show you all of the accounts you’re looking to pay off.

After you get the report, find out exactly how much debt you are in and don’t forget to include the interest rates. List your debt and come up with a number you need to hit. If you are having trouble reading a credit report, you can always contact a credit expert and have them go over your report with you.

Step 2: Create a Monthly Budget & Payoff Plan

Okay, so we’ve located all of the threats. Next we have to devise a plan of attack! Create a budget to find out exactly how much money we will have to put towards your debt. Calculate your budget by listing your expenses. Make sure you list EVERYTHING from your mortgage payment to your morning coffee purchase. Start with your necessary expenses and work your way down. The top of your list should include loans and bills that need to be paid (mortgages, auto loans, utilities, etc.) If you have a family, a business, or others who depend on you, you can visit lifecoverquotes.org.uk to get life insurance.

Now that you have your list of expenses, study it. See all those expenses at the bottom of the list that you don’t need? (yeah I’m looking at you Netflix.) Take all of those expenses and cut them out of your life. You know how in every zombie movie or show there’s always that group of bumbling idiots that slow everyone down? Well that’s those unneeded expenses like Netflix and Starbucks. It’s time to get serious and right now is not the time for fun. All of those expenses you cut just became more ammunition to put towards defeating your debt.

If you’re looking to really get serious consider selling some of your bigger toys. Things like classic cars, jet skis, boats, and motorcycles can be sold for large amounts of cash that will take a huge chunk out of your debt.

After you’ve figured out your budget, set goals for yourself and stick by them. Never decrease the amount you’re paying towards your debt. If you stick to your budget and goals this should come as no problem. You can attain even more help with the use of apps like mint.com, ReadyForZero, and DebtPayoff. These apps make it easy to set payoff goals and stick to them.

Step 3: Do Your Research

research

The last step in planning before we spring our attack. Let’s research your accounts and look for anything that might benefit us even further. Many consumers are left in the dark when it comes to cheaper options to paying off debt.

Credit Card Debt

If credit card debt is your main concern, then look into applying for 0% balance transfer cards. 0% balance transfer cards can be your secret weapon when attacking your accounts. Like their name, these cards carry 0% interest for a certain period of time and will transfer your balances from an account to the new card. You’ll be surprised how quickly you can pay off your debt when not paying interest.

Medical Debt

Medical bills is one of the largest causes of debt. Recently the credit bureaus had decided that medical debt would weigh less on your credit report and wouldn’t report until 6 months past due. In the past, insurance companies would take extended periods of time to pay off the debt, which would hit the consumer’s credit report and drop their score. If you do have medical debt, make sure you keep in contact with your insurance company and straighten out all of the payment arrangements. If you are unable to pay your bills on time  then let the creditor know so you can work something out.

Student Loan Debt

Currently student loan debt is at an all time high of $1.2 trillion! Putting it well beyond credit card debt which sits at $884.8 billion. If you have a large amount of student loan debt, then you may want to consider student loan consolidation or look into student loan forgiveness programs. If student loans are the majority of your debt, check out my article Game of Loans – A Guide to Defeating Student Loan Interest.

Step 4: Attacking Your Debt

You’ve located and listed the accounts, you’ve prepared a plan of attack, and you’ve researched your enemy’s weaknesses. Now let’s get out there and attack that lingering horde of debt!

When it comes to paying off the debt there are 2 methods you can go by. One is called snowballing and the other avalanching.

Snowballing happens when you go after your smallest accounts first and work your way up the chain. The feeling of accomplishment when paying off these accounts will fuel you to keep going until you take down the big one.

Avalanching happens when you attack the largest account with the most interest first and work your way down. This method will actually save you the most money in the long run because you’ll be eliminating those high-interest rates first.

Regardless of which method you choose, allocate the money you were putting towards eliminated accounts to your next payment. The more your accounts start to fall off, the quicker you’ll see your debt drop off. Always remember to pay on time so you’re not hit with any late fees. Sign-up for auto payments if you’re the kind of person that might forget your payment dates.

Step 5: Put Extra Income Towards your Debt

A few times during the year you may come into some extra income. Treat this extra income as added ammunition in your battle against debt. Your tax refunds are your debt clearing grenades, job raises are your anti-debt rounds, and freelance or side job pay is the unstoppable tank you drive to clear a path through interest.

Putting all of your extra income towards your debt can be a game changer and should see your debt deplete in record time.

Step 6: Reward Yourself (Without Spending)

You’re reaching your debt goals and every time your knock off an account you should be rewarded. Now this doesn’t mean go out and splurge on some of those unneeded expenses you’ve had in the past (that would defeat the purpose of this entire campaign.) Try to find ways to reward yourself with little or no expense. Take time from your nightly routine to watch your favorite show or movie, make your favorite meal or dessert. Perhaps buy yourself a coffee (just one!) Don’t spend over $5-10 on a small reward.

Step 7:  Congratulations You’re Debt Free!

walking debt thumbs up

You stuck to your plan, you attacked your debt, and now you’ve come out victorious and debt free. Your a debt-zombie slaying machine and Rick Grimes has got nothing on you! Now you can safely maintain your debt from here on out.

This is where you and me part ways. I had an abundance of fun coaching you through your debt battle and I hope my zombie/debt analogies weren’t too much for you. Before I go just remember: Don’t spend your money on unneeded expenses and make sure you can always pay off what you charge. Stay focused on what is important and use our Credit Blog to help you along your way. You can do it! I believe in you! Godspeed!

Need Help?

If you still need help with controlling your debt and/or improving your credit, fill out the form below and get a free credit consultation from a credit expert at Better Qualified.


What is a Charge-Off?

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what is a charge off

Although the term “charge-off” sounds good, in reality, charge offs are devastating to your credit report and score. Having an account report in charge off status can bring your score down hundreds of points and may even put that account into collections.

What is a Charge-Off?

charge off question

An account can get changed into charge off status once a consumer is late 6 months or more. The creditor assumes the debt will not be paid and “charges off” the account. At this time, the entire balance becomes due and the account may be purchased by a 3rd party collector.

How Do I Handle a Charge-Off?

call charge off

Charge-offs can be considered a serious derogatory account and may hinder you from getting future credit. If you have a charge-off on your credit report, the first thing you should do it contact the original creditor. The charge-off will still need to be paid so try to negotiate with them for a payment you can afford. Creditors will usually be willing to make a settlement for less than the amount owed. However, making a settlement can cause the derogatory account information to remain on your credit report for years to come. Your best option is to see if the creditor is willing to do a pay for deletion.

Send a Pay for Deletion Request Letter

Charge off Letter

Ask the creditor if you can do a pay for deletion. You may have to pay more than the average settlement amount, but your account will get removed from your credit report, which will increase your score and be beneficial to you in the long term (use this guide to create a pay for deletion letter here.) If the creditor agrees to a pay for deletion, make sure you get the agreement in writing so you can take it to the credit bureaus to ensure the account gets removed.

If the creditor refuses to budge on a pay for deletion, see if you can get them to change the status to “closed” rather than charge-off, as that will also affect your score. Make sure you satisfy the debt regardless of the outcome. If the debt remains unpaid, your account could fall victim to a collection account, or even worse, a judgment.

Removing the Account

If the account remains on your credit report after the debt is settled, you will want to dispute your account. Disputing your account with the bureaus can get your account removed much sooner than its 7 year lifespan. You can dispute your account online with the bureau’s website, by mail or by calling a credit repair company like Better Qualified.

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click on the link below for your free credit consultation with a credit analyst.

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Can You Have Too Many Credit Cards?

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Is it possible to have too many credit cards? Having a large amount of credit cards isn’t always a bad thing. If maintained well, having tons of credit cards can be beneficial to your credit score. When it comes to your credit score, it’s all about managing your credit cards correctly. If you are unable to keep track of your balance, then chances are you might have too many cards to handle.

When the credit bureaus factor your credit score, they will take a look at your credit utilization. What this means is they look at how much borrowing ability you have and how much you are actually using. For Example: If you have a combined credit limit of $50,000 and you’re only using $5,000 your utilization is 10% which is great! Now lets say you close most of those cards and your credit limit drops to $10,000. Your utilization ratio just went from 10% to 50% and your score probably took a nosedive. Not everyone can manage this much credit in good fashion. Here’s 5 signs your credit cards may be getting out of hand:

1. Can’t Remember Which Cards are Which?

credit wallet

I’m sure you’ve seen it before or maybe it’s happened to you. You’re at the outlets purchasing next season’s wardrobe when your card gets declined. You think to yourself “Oh that’s the “bad” card, let’s try this one. I think this one has some credit on it.” Sound familiar? If you said yes then this is a sign you may be spending beyond your means. Always try to keep track of which cards carry what balance. Doing so will allow you to better maintain your accounts and let you focus more on paying down that “bad card.”

2. Opening New Cards because the Old Ones are Maxed Out

credit-card-851506_640

Probably the biggest red flag to having too many credit cards. If all of your cards are maxed out, the last thing you need is another credit card to add to you maxed out list. Adding a new card to your already monstrous debt will only cause more problems. Adjust your budget and attempt to be more frugal with your spending money. Try to focus on paying the maxed out cards off. If possible apply for 0% balance transfer cards to help pay accounts off. 0% balance transfer cards will allow you to pay off your balance with no interest for a set amount of time. You’d be surprised how quickly you can pay down accounts when not paying interest.

3. Getting Denied for Additional Credit Cards

denied application

If you already have a decent amount of credit cards and you’re getting denied new credit, chances are you have too many cards in derogatory standing. There are a few reasons why you would get denied new credit. As stated previously, your cards may be maxed out and therefore the creditor assumes you aren’t capable of taking on new debt. Another reason may be that you have too many late payments on your report and the creditor doesn’t believe you will pay on time. Remember, late payments can remain on your credit for up to 7 years, even after current or satisfied.

4. Those Damned Late Fees!

past due late

Late fees are always a pain in the rear end and getting hit with them every month is a good indicator you have too many cards. Even if you are capable of paying on time, some cards might slip through the cracks simply because you forgot about them. Late fees cost you money and if 30 days past due, will destroy your credit score.

5. That Mountain of Unused Credit Cards

credit card mountain

Closing old credit cards can hurt your credit score, this goes back to the credit utilization we talked about in reason 1. That being said, if you are already using a bunch of cards and have a plethora of old cards just taking up space in your wallet, you probably have too many cards. If these old, unused cards still carry balances on them, make your best effort to pay them off. After these accounts are paid you can close them to help manage your debt. Just be aware, if the accounts your looking to close make up the majority of your credit limit, your score will suffer. Of course if you are not struggling to pay off accounts and you have a good credit utilization ratio, then you may want to leave them open until they go inactive. As long as you make payments on time and keep a low credit utilization ratio, you will see a positive reflection in your credit score.

Contact us For a Free Credit Consultation

If you’re having credit troubles contact us for a free consultation. We’ll go over your credit report with you and point you in the right direction. Just fill out the form below.


What is a Good Credit Score?

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With 56% of Americans having poor or bad credit, good credit can be hard to come by… But what is a good credit score exactly? Different lenders may have different definitions of what a “good” credit score is. One lender may approve clients with a 640 credit score or higher while another might approve clients at 720. The higher your credit score is, the more likely you are to get approved and the better your rate will be.

Score Range

FICO score is the most commonly used credit scoring model. FICO scores ranges from 300-850 and can differ depending on what credit application you’re pulling for. If you are applying for a mortgage your score will be different than applying for a new car, and both of those scores will be different than a score applying for a credit card, and so on. Here is the considered scoring range for FICO scores:

FICO Scoring Model:

Credit score

  • Excellent Credit: 781-850
  • Good Credit: 661-780
  • Fair Credit: 601-60
  • Poor Credit: 501-600
  • Bad Credit: Below 500

Why it’s Important to Have a Good Credit Score

While you may be able to get approved from some lenders with a 640, you’ll be missing out on premium rates which can mean you’ll be paying more money in the long run. Someone with a 780 may wind up paying close to $100,000 less on a mortgage compared to someone in the mid 600s. Good credit will also allow you to get better credit cards with lower interest rates as well. It’s no joke, people with bad credit will always wind up paying more. Read our blog on how bad credit will control your life for a better understanding of this.

What is your Credit Score?

Don’t just assume you have good credit. If you plan on applying for a loan in the not too distant future, you may want to figure out where your scores are at right now. Find out your scores and make sure there are no errors reporting on them. Fill out the form below and Better Qualified will give you a free credit consultation with a credit analyst.