We live in a world of plastic. In fact, some people have become
too dependent on the convenience it brings, not knowing how it
can affect their financial standing.

Let’s face it, swiping comes easy and it makes some forget that
it’s not their money. Ask them about cut-offs, interests or
Universal Default clause and you’d get a blank stare. And a lot
don’t even know what a credit score or a good score is.

First off, a credit score represents a person’s creditworthiness
and is defined as a numerical expression based on a statistical
analysis of a person’s credit files. Credit report information
usually sourced from credit bureaus is often the basis of score.
Different countries however employ different systems to come up
with a person’s score.

So what really is a good score? In the United States, credit
providers, banks or other lending institutions give a lot of
weight to credit score in identifying which individuals have the
capability to pay back loans or credit card spending.

A good score could also mean lower interest a good rate to those
who want to avail of housing loans. A credit score of 800 is
excellent but statistics state that only 28% of loan applicants
qualify for scores between 750 and 799. Most credit agencies
providing home loans require a score of 620 or higher.

Experian, Equifax and TransUnion are three of the major credit
bureaus in the US that issue reports. Credit card holders are
advised to check their credit information at least once a year
from the 3 or get hold of a combined report or FICO from Fair
Isaac. FICO is the most widely known type of calculating a score.

People who give importance to keeping a good credit score or
getting it above the median score of 723 are more likely to get
additional credit card benefits, better career opportunities,
and lower loan rates. Having a good credit score also means
greater purchasing power.

About the author:

Author: Cecilia Rodriguez