When it comes to credit ratings, scores between 690 and 719 are generally considered good. Scores above 720 are considered excellent, while scores between 630 and 689 are considered fair. Anything below 630 falls into the bad credit range. If you have a lower than stellar credit rating, it's important to take action as soon as possible to work towards good credit and increase your chances of being approved for financial products such as credit cards and loans. If you have bad credit, take some time to review your credit score and identify the cause.
You may not have made payments or have accumulated a balance after the due date of your bill. To achieve a fair, good, or excellent credit rating, follow the tips below. You may be entitled to additional free credit reports in certain circumstances, such as after placing a fraud alert, becoming unemployed or receiving public assistance, or having been denied credit or insurance in the past 60 days. The three main consumer credit bureaus that collect credit data for reporting are Equifax, Experian, and TransUnion. In general, having a lower credit rating means that lenders will charge higher interest rates to offset the risk.
A credit score is a three-digit number, usually on a scale of 300 to 850, that estimates the likelihood that you will repay the borrowed money and pay the bills. However, there have been several general breakdowns of score ranges to give you an idea of whether you have good or bad credit. In general terms, scores between 580 and 669 are considered fair; scores lower than 580 are considered bad or poor. Lenders carefully examine your credit report to determine if you qualify for credit, such as credit cards or loans. Most negative entries on your credit report will no longer appear in your credit history after seven years (although some may take longer).
You can check your own credit - it doesn't hurt your score - and know what the lender is likely to see. Keep old credit cards open to protect the average age of your accounts and consider having a combination of credit cards and installment loans. But what does this really mean? Your credit score is an attempt to predict your financial behaviors. The two main credit rating models, FICO and VantageScore, consider the same factors but weigh them somewhat differently. If you are offered credit with a poor credit score, you will most likely pay more in fees and interest rates since you may only qualify for a higher interest rate. Credit reporting agencies - also called credit bureaus - collect that data and compile it into their credit reports.
Credit bureaus are required by law to provide you with a copy of your credit record if you request it free of charge or for a nominal fee. Job loss, a bad economy, or simply poor credit management can put you in a situation where you have bad credit.