Good Credit Explained
What Good Credit Is Good credit is issued to individuals who take pride in their credit payments and make sure that their payments are paid in full. Good credit is determined by a set of factors that credit bureaus analyze in order to produce a score that allows lenders to decide on whether or not to loan you money or decline the application for the loan. Good credit is perhaps the number one decision-maker when it comes to applying for car loans, mortgage loans, credit card loans, and other forms of credit loans, if you are able to maintain a good-credit standing. Good credit is determined by the following guidelines:
- 1. The history of payments. Were these payments and are these payments paid on time? Are there any late fees related to these payments?
- 2. Your outstanding balances are reviewed by the lender in order to process your application. If your outstanding balances are high or have been maxed out, this factor will go against your credit.
- 3. The length of your credit history will determine the time that you have maintained good credit standing.
- 4. Short-term accounts that have been opened and exist in multiple amounts will not help you to maintain good credit.
Credit Scoring System Good credit is usually a score of 700 or higher. This score will always gain the attention of lenders and help to reduce documentation and paperwork for the borrower as well as qualify the borrower for lower payments and interest rates. A medium score is considered to be an average credit score and not a good credit score. Good credit scores are what make the lenders offer the 0% interest deals and no payment deals. The individuals who have good credit are able to take advantage of these offers because the lenders realizes their good credit establishment and feel that they will be repaid in a timely manner.
Words For The Wise It is wise to start with one credit card that has a small limit. The limit should not exceed what you can afford. When trying to build good credit, the purpose of getting a credit card is to establish good credit, not to purchase items. Continue to maintain a balance, but make sure to pay more than the minimum payment to allow the creditor to be aware of the work you are doing to build a positive credit history.
The Effects Of Credit On You Building good credit will make a big impact on your future. If a person has good credit, their future will flow much smoother when trying to buy a home or finance a car. Good credit is determined by a mathematical equation that determines the credit score for the lender. A credit report is available to you in order to view your credit history and get your credit score. If the credit report has a discrepancy, this may give you the chance to repair it and help you to build good credit once again.