There are various disadvantages of owing debt or borrowing credit. However, we cannot live without it. We require credit for every possible expense in our lives. And financial institutions lend us money readily as they earn most of their income through interest and various nonsensical fees. But if you have a bad credit score, you cannot borrow even a penny. We have heard this over and over again, but what is considered a good credit score for us to borrow money? Before we jump directly to the ideal number, it’s important to understand few things first. Most common type of score that’s widely accepted all over the US is FICO score. This score is updated based on the information and reports provided by three credit monitoring agencies †TransUnion, Equifax, and Experian. Though there isn’t much difference between the way these agencies calculate an individual’s score, it differs minutely. However, these scores are then consolidated in to one †FICO score. The score is used to measure an individual’s credibility and financial standing. Find out what is considered to be a good score can be a difficult. However, let us try to narrow down the perplexity and arrive at a conclusion. Majority of people in the US has score between 300 and 850. So, based on this information, myfico.com gives us a median score, that is 723. This means the upper half and the lower half is divided by the score 723. So, if you can manage to get your score above 723, you lie in the upper half population. So, any number above 723 answers our question of what is considered a good score. But our aim is not to seek a perfect score but to get a number which can avail credit without any fuss. We need a score that is liked by the financial institution, who ultimately provide us credit. Technically, banks provide loans to people who have scores above 680. So, any number above 680 is what is considered a good score all major financial institutions. This doesn’t mean people below 680 wouldn’t get credit. They will but at a very higher rate. So, if you ask what is considered a good score to avail best possible interest rate, the number may vary. Based on the information revealed by Informa research Services, score ranging from 680 to 699 will be charged with 4.9% interest rate for a 30 yr mortgage. While score between 700 and 759 enjoys the rate of 4.72% and anywhere between 760 and 850 will be charged 4.5%. Hence, if you score is higher than 760, you are amongst the few privileged ones who enjoy the lowest interest rate.
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