Excellent credit score
Credit scores play a very important role in lives of people especially when they go out for getting different types of credit facilities. While offering loans in countries like United States, Canada, UK, etc, lending institutions obtain credit score of a person from specialized organizations called as credit bureaus and take decision accordingly. Best credit scores that a person can have are called as excellent credit scores. People who have excellent credit scores can be called as privileged ones who can enjoy all favorable terms and conditions attached with loans. In fact, lenders would like to offer loans to such people. Interest rates at which loans are offered are certainly the lowest. Similarly, credit card companies offer best rewards and rates to people with excellent credit scores.
In fact, some cash back and 0 APR credit cards are offered to those people only that have excellent credit scores. While offering rental homes, landlords also check the credit score of a person and if he has excellent credit score, he would not find any difficulty in getting home on rent at best prices. Overall, it can be said that people with excellent credit score can approach financial institutions with confidence. Sometimes, it also happens that a person may have a credit scores but due to errors and other negative items in the credit report, these get lowered. In about 70% cases, credit reports contain errors that lower the credit score of a person. Thus, a person must check his credit report before approaching any lender. In U.S., as per new laws, a person can get free copy of his credit report once in a year from all the credit bureaus.
Three major credit bureaus in U.S. are Equifax, Trans Union and Experian. credit scores are also called as FICO scores and are provided by Fair Isaac Company. FICO score is basically a three digit number that denotes all the information about a person. Any scores above 750 are called as excellent credit scores. From 720 to 750, scores obtained are very good and from 660 to 720, scores obtained are acceptable. It has been noticed that most of people think that if they have credit scores more than 720, they have excellent credit scores. This, however, is not true and a person should have at least score of 750 to qualify under excellent credit scores. FICO scores range from 300 to 850.
There are many factors that decide if a person would be given excellent credit scores or not. 35% role in determining the credit score is played by the payment history of a person, that is, whether he has been able to repay the credit facilities obtained in time or not. Similarly, 30% of credit score is determined by the amount that any person owes to lenders. 15% is determined by the credit history length, 10% is determined by the numbers of credit accounts a person has applied for and opened and rest 10% is determined by different types of credit accounts a person has, i.e. credit account mix. For knowing if a person has excellent credit scores or not, a person can log on to myfico.com which provides the current FICO scores.
As discussed above, any credit scores between 750 and 850 are considered as excellent credit scores. In this score range also, if credit score of a person in near the 850 mark, he would get the best possible terms and conditions. Similarly, people with credit score near to 750, though they would get one of best terms and conditions, these would not be as good as are offered to people with credit scores near to 850. This is because lenders consider that by offering credit facilities to a person with scores near 850, their risk is minimized. In such cases, lender does not mind offering rewards and incentives in the form of lowest interest rates, lowest closing costs, longest repayment periods etc. Also, application of a person with excellent credit scores is processed in a fast manner and he can get the loan in no time for fulfilling his requirements. If a person is not having any credit history, it becomes very difficult to provide FICO scores and thus, such person is offered with 350 credit score. However, it does not mean that such a person would not repay credit facilities in time or would default in making payment.
People with excellent credit scores have been able to save thousands of dollars towards interest and other costs as these people are offered loans at lowest APR. These people have been allowed to get one of most privileged credit cards and are able to increase their savings through credit card points offered at hotels, airlines companies etc.
If any person is not having excellent credit scores, it does not mean that he can never get it. By adopting certain measures, a person can easily improve his credit scores and over a period of time, can put himself in FICO score range of 750-850. One of best ways of improving credit scores and maintaining the excellent credit scores is to make payment of bills on time. A person should be prudent to manage his credit is wise manner. For example, large numbers of credit accounts should not be opened unnecessarily. Installment loans where a person is required to make payments once in a month should be given top priority.
This is because most of lenders in U.S. report to credit bureaus and by making timely monthly payments successfully, a person can easily improve his credit score. A person should never over utilize his credit limits and borrowing should be lower than the same. In case of credit cards, a person makes shopping for amount more than the available balance. In such cases, a person may get his credit scores lowered. As a matter of fact, a person must not have more than 2-3 credit cards. It has been seen in many cases that for purpose of balance transfer, 0 apr purchases, etc, a person gets many credit cards. Such an act lowers the credit score and a person may slip from range of excellent credit scores to very good credit scores. One point slip from 750 to 749 can make big difference in interest rates and other terms and conditions offered.
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