Your credit score is your passport to money

by Shelton on May 28th, 2014

filed under Credit Scores

Most credit scores run in the range of 301 to 850. Within that range, there are different categories, from bad to excellent. Various lenders may have different criteria and they may change.

Credit scores are computed based on mathematical models that analyze information in your credit reports. Credit scores compare factors such as payment history, debt levels and the age of credit accounts to figure out what consumers who pay their bills on time have in common. The goal is to predict how new and existing customers will handle credit. Here are typical ranges:

  • Excellent Credit: 750+
  • Good Credit: 700-749
  • Fair Credit: 650-699
  • Poor Credit: 600-649
  • Bad Credit: 599 and below

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There are some best practices you can follow to maintain a high credit score:

  • Pay all of your bills on time.
  • Keep the balances of your credit cards at 20 percent of the available credit or less. This refers to the credit utilization ratio–the lower, the better.
  • Apply for new credit in moderation; you dont want lenders to think youre credit-hungry.
  • Keep a healthy mix of credit – revolving, installment and mortgage.
  • Think twice about closing credit cards with high limits or with good payment history. This may eliminate part of your history and increase your credit utilization ratio.

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