What is a good credit score?
A good credit score can make the difference in getting approved for a loan, a line of credit, low insurance rates, or getting that job you’re after. If you have a bad score it can take the possibility of all of those away from you. So, yes, having a good credit score is important. But what is a good credit score?
Credit scores range from 300-850. The best score is between 720 and 850, while a score between 640 and 720 is considered to be fair to good. 640 or worse is not good. The average credit score is around 687.
How can you maintain a good score?
You should check your credit score regularly. Creditors can (and often) report inaccurate information, so it’s important to monitor your report for accuracy. If you find inaccurate information on your report you should contact the credit agency and inform them right away. You are entitled to a free copy of your credit report from all 3 credit bureaus once a year.
As well as keeping your credit report clean from derogatory items, it is important to maintain the amount and types of credit accounts you have. These are credit cards, mortgages, auto loans and personal loans. There isn’t an exact number of accounts you should have. The optimal number of open accounts is dependent on your situation. It is important however to keep well below your credit limit and maintain a low balance on your accounts. You want to spread out your balances so you don’t hit your credit limit on one account. Having more accounts will give you better credit to work with.
The amount of money you owe in proportion to your credit limit also factors into maintaining a good credit score. We recommend keeping your balance on each credit account to around 30% or less, which is ideal for your credit health.