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What Is Good Credit Score - What is a good credit score?

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Your credit reports are analyzed and data is processed using arithmetic and analytical techniques to generate a numerical figure — your credit score. In essence, a credit score is mathematical interpretation of a consumer’s credit report and is a measure of an individual’s financial credibility.

Your credit score is one of the most important features of your financial profile. Lenders, creditors, banks, credit unions, credit card companies, insurance agencies and employers analyze your chances as a potential consumer (employee, in the case of employers) by evaluating your credit score. Since your credit score is a measure of the your credit-handling prowess, a good credit score captures a lender’s faith in your financial abilities and makes you eligible for higher loan amounts, credit card limits, low insurance premiums, and lower rates on credits etc. In a nutshell, a good credit score eases out the pathway to all financial transactions that work on credit.

It is difficult to bracket a good credit score within numerical values. In a generic sense, the higher your credit score, the better for you. On a widely accepted basis, a score of 720 and above is considered to be creditworthy by banks, lenders, potential employers and other financial players.

It is much more meaningful to define a good credit score while keeping an individual’s need in mind. While a person with a certain credit score may consider it good enough for acquiring small loans or credit card with nominal limits, the loan’s interest rates will be higher for individuals with lower credit scores. The same score may fall short on value in case the need is for higher loans, or buying multiple high-valued credit cards or even high premium policies.

So, while some widely accepted standards do exist, a good credit score can be more aptly defined differently for each individual by taking into account his/her requirements and conditions. Apart from the customized needs of the individual, different companies can have minor variances in their categorization of credit scores. On an average though, a good credit range for most organizations falls between 700 and 800. Anything beyond that makes for excellent credit scores.

As an overview of the general standards that prevail, a score in the region of 700 and higher is considered fine by most organizations. The mantra with credit scores is: the higher the better!

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