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Good Credit

Candlefocus Editor

Most importantly, good credit is a sign of financial responsibility and sound fiscal habits. To maintain a good credit score and become eligible for loans with reasonable interest rates, consumers must show a history of making their payments on time. Additionally, a good credit score may also be achieved through paying down debts, limiting credit inquiries, and maintaining a low credit utilization ratio.

To find out what your credit score is and how it looks to potential lenders, obtain a credit report by requesting one from the three main credit bureaus — Experian, Transunion, and Equifax. Beyond assessing your borrowing options, your credit score is useful for other activities, such as renting an apartment, getting insurance, and applying for a job.

A good credit score is usually defined as a credit score of 660 or higher on the FICO rating scale; however, what a lender considers "good" may be higher or lower, depending on their preferred range. A FICO score of 750 and above is considered excellent credit, while scores of 700-749 are very good. Conversely, scores from 600-699 are considered fair credit and can be improved by paying down balances and avoiding new applications for credit when preparing for a loan.

Building good credit requires discipline and intentional effort. Start by making payments on time, keeping credit utilization low and limiting credit applications, paying off balances whenever possible, and monitoring your credit report regularly. With good credit, you will have more bargaining power and the option to borrow money with lower interest rates.

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