What is "good credit"?

Many people are not sure if they have good credit or bad credit, only to find out that it must be bad when they are denied on a loan and then need credit repair. Since it is much easier to find out before you go and apply for a loan, you should be paying attention.

First of all, if you need to know how good your credit is before you apply, you should just go out and get a copy of your report and your credit score. Excellent Credit is a score now of 750 or better. If you have a score of 650 to 749 you have a good credit score. Anything below that is considered Fair to Poor. To get the best interest rates you will want a score of 750 or better.

If you have good credit and a score between 650 and 749, you will find that you will pay a bit more in interest rates. If you don’t need to use your credit right away, then you can work to improve your credit score. Pull up your credit report and note which items are affecting your account negatively. If the negative items are not accurate then dispute those with the credit bureau. You can get those corrected and that will immediately improve your credit score.  But if the negative items are accurate, you might be able to talk with your creditor and have the re-age the account. That means that if you make payments on time and in full for each month the creditor agrees on, then they could take away any late payment data that they are reporting. This will help your credit score quite a bit since 35% of your credit score is based on late payment history.

Now if your credit score is between 350 and 650 if you quite a bit more work to do. You will pay some of the highest interest rates out there but if you pay those loans on time and in full, you might be able to refinance your loans. Refinancing is one of the best ways to reduce your interest rate and also help your credit score. Having Bad Credit is not uncommon among most Americans but you can work your way out of the hole. If you don’t have any credit then it is best to never fall into the trap that credit can create. But digging yourself out is much more work.

To dig yourself out of bad credit, start by cleaning up your credit report. Once you have an accurate credit report, make sure that you are making your payments on time and in full. Now review your outstanding debt and get that reduced. You want to have no more than 30% of your available credit being used. If you have multiple car loans try to get them paid off as quickly as possible. Keeping your Mortgage paid on time and in full is also very important. A home loan can be and usually is very helpful to your credit score.

So having good credit is not so hard but having excellent credit is much more work. Credit bureaus have made getting a good credit score possible but having an excellent credit demands that you have complete control of your credit.