Do you remember when you checked your credit score for the first time? It must have been a joyous feeling of getting introduced to the credit world. Since checking your credit score, everyone would have a determined mind to increase the credit score. But over the period, things could have turned bad and a financial crunch would have been unavoidable. In such circumstances, your credit score would have dropped from your initial score or had you been regular with the payments, there could be an increase.
It is important that you check your credit score periodically to ascertain you are in good credit health. Wondering, what a good score is, here we have all the answers for the questions you are very likely to have on your mind.
Credit Score Range
The credit score provided by all the credit bureaus ranges between 300 to 900. When your credit score is generated for the first time, you are likely to get a score between 720 to 750 if the repayments are made on-time. The credit score dips without a doubt when you default on your payments. If you are a credit card holder, maxing out your credit limit could also damage your score.
Good Vs Bad Credit Score
The score anything closer to 900 is considered very good score and you are a preferable candidate for the lenders to provide credits any time at favourable terms. A credit history laden with negative issues such as ‘written-off’ and ‘settled’ status, delinquencies, maxing out credit limits and too many hard enquiries are score droppers and candidates having such track record are not preferred by the lenders for offering unsecured credit.
Additional Reading: Why is my credit score low?
Credit Score: Myths and Facts
Myth: Frequently checking your credit score will hurt your credit rating.
Fact: There is no co-relation with checking your credit score and calculation. Frequently checking your score in fact helps you keep track of your financial health.
Myth: Closing your credit card account will hurt your credit score
Fact: It won’t but closing your credit card without paying the outstanding dues will hurt your score.
Myth: You can pay money and improve your credit score.
Fact: Credit score never works that way. It is directly linked to your credit behaviour and it is updated by the credit bureaus.
Myth: Your credit score improves after paying off your past dues.
Fact: You can prevent your score from dropping further by clearing the past dues. To improve your credit score, you need to have a loan or credit card account active.
Additional Reading: No credit score? Fret not! You can still get credit
Finding Out Where Do You Stand?
As you can check your credit score frequently or view your credit report, you can get monthly or quarterly updates to keep track of your credit health. Your financial activities play a crucial role in determining a good credit score.
If you happen to have a low credit score, take steps to improve it. A bad credit score is not the end of everything, you can always get back on track to good financial health.