Good & Bad Credit Score

Dating services use personality profiles to find the best match between people. In the same way, credit score is a mathematically calculated financial profile used by lenders to match applicants with loans. It lets lenders determine how much risk is involved in lending money to a person, and thus lets them decide to let the money or not, and also to change the terms of the loans to match the risk of the loan.

Good and Bad Credit Score Ranges

The credit score range lies between 300 and 850. To the potential buyer, the score closer to 850 indicate a good credit score and thus more credit worthiness of the person. Credit scores from 720 to 850 are considered good credit scores; those between 660 to 720 are considered average credit scores and between 300 to 660 is considered a bad credit score. To get a good credit score, one is needed to be punctual in all payments of bills and loans. The lower the amount of money owing to a person also leads to a good credit score. Having a long credit history with an institution goes a long way in leading to a good credit score. Avoid taking too many loans or credit accounts as this may give a negative impact to the credit score, and thus lead to a bad credit score. Similarly, a person who is bad at paying bills gets a bad credit score and one who has more money owing to an institution or lender leads to a bad credit score. Avoid opening accounts with different financial institutions as it only lowers the credit score.

A person in the bad credit score range should try to improve their credit score range by doing all the things that enhances the credit score. This step is not an overnight achievement, but over a length of time, a bad credit score can indeed grow into a good credit score. However, a person with a good credit score should aim at maintaining the credit score by maintaining their credit habits!