Cars, Homes, and Credit Cards: What Credit Score Do You Need?
Your credit score determines your ability to get a loan for many things, including cars, mortgages and credit cards. But what is considered a good credit score, and how do you know whether your score is high enough? This guide outlines what credit score you need to be considered creditworthy and why it is important to maintain a good credit score.
What is a good credit score?
According to BankRate,a credit score of 740 or higher opens you up to the most favorable interest rates for credit cards and other loans. While you can still attain credit with a lower credit score, it generally comes with higher rates and fees.
Why do I need a good credit score?
If you have a credit score above 740, financial institutions will consider your score very favorable and often times, offer better interest rates. If your credit score is below 700, you still might be able to access credit, but you may find limitations to the deals being offered and may incur higher interest rates.
If your credit score falls significantly below 650, you may be restricted to lenders that specialize in lending to people with lower credit scores, and the interest rates you pay will be substantially higher.
How do I find out my credit score?
You can order a free copy of your credit report once a year from AnnualCreditReport.com . You can also access a paid option at MyFico.com to view your credit score on a more frequent basis.
What if my credit score is too low?
If your credit score is lower than you hoped, don’t panic. You can improve your score by following these tips:
- Make all payments on time; late payments will quickly affect your score.
- Correct any errors on your credit report by contacting the appropriate credit reporting agency.
- Limit the number of cards you apply for. Numerous applications in a short period could signal to lenders that there may be financial concerns and hurt your lending options.
- Try to use only about 30 percent (or less) of your total credit allowance. Sailing too close to the limit may suggest you have trouble managing your money.