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What Is A Good Credit Score?

Education / By Raquel Robinson

Having good credit is a necessity, but what is a good credit score? Credit scores have a scale of 300-850, and a good credit score typically starts at about 680 and that's still a fair credit score. Once you reach 720-740 you are considered having excellent credit.

Now keep in my mind each lender whether applying for a mortgage or a credit card all have their own standards on whether to grant you credit or not. With that being said you don’t want to get caught up in your actual credit score because it is the content of the file that matters. 

When we think of the average consumer today they typically tend to own a home, car, have a student loan, personal loan, and a mix of store/major credit cards. Now you don’t have to have all of these things to have a good credit score, but the more you have in your credit file the better you are able to display you can manage a variety of credit. Just because you have 2 credit cards with a 700 credit score doesn’t mean you have good credit. This kind of credit file is considered to be a thin file and is looked at as being a risk.

Having good credit matters because it determines whether you can borrow money and how much you'll pay in interest.How to get a good credit score

Good credit habits, when practiced  consistently, will help you build toward having a good credit score. Follow the below tips to start your new credit behavior and you can have good credit.

  • Pay your bills on time. Payment history has the largest impact on your credit score and there are 192.5 points up for grabs in this category. 1 missed payment can drop your score 50-100 points and can stay on your credit report for up to 7 years.

  • Keep your credit utilization low. Credit utilization accounts for 30% of your score and that's 165 points up for grabs in this category. This is the fastest way to increase your credit score by lowering your balances on your credit cards. You want to also aim for under 30%, the lower the more of an increase in your score.

  • Keep accounts open as long as possible in order to have credit age. How long you manage credit is 15% of your score and there is 87.5 points up for grabs in this category. Having credit cards is the most powerful account on your profile. If managed properly it can stay open forever. You want to keep credit accounts open unless there is a reason, such as high fees or poor service, to close them. Being added as an authorized user to a family member or friends account is the only way to speed up the age of your credit file.

  • Having a variety of credit accounts. As you build credit you want to display a mix of installment accounts & revolving accounts. This category provides 10% of your score so there is 55 points up for grabs just by having a good credit mix. 

  • Try to avoid making too many credit applications in a short period of time. Credit inquiries when applying for credit can cause a small but temporary drop in your credit score. Having too many in a short period of time can really add up. Inquiries are also 10% of your credit score and there are 55 points in this category up for grabs.

Following these tips will put you on the path to have excellent credit in no time. 

At Royal Financial Services, we offer you the Royal Treatment Credit Repair Service. To schedule a call with one of our experienced credit specialists go to our page and book an appointment.

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