This question – “What is a good credit score?” – is a very common question when we think about applying for a new loan or credit. The answer will generally vary depending on the purpose and the amount of the loan you are seeking. Also, the credit score itself may not be the only factor considered by lenders. Therefore, it’s a good idea to try to familiarize yourself with both the good and the not-so-good items contained in your consumer credit report.
At Bankers Trust, a good credit score is generally considered to be a 700 or higher. This means that those with a score of 700 and above are more likely to be approved for credit and obtain it with competitive rates and terms. Credit scores may not be the only factor considered in a credit application, thus understanding all the requirements considered in the application will help you be more confident and comfortable in the process of obtaining a new loan or credit.
A credit score is a numeric representation of a person’s record using and managing credit to help lenders assess a person’s creditworthiness. Credit scores can range from 350 to 900, they can change almost monthly and are mostly made of the following factors:
- Payment history – your record of making payments on time and in accordance with the terms of the loan/credit.
- How much you owe – the amount and aggregate of each and all credit accounts and loans.
- Length of credit history – the age of current and closed/paid loan and credit accounts.
- Types of credit – the type of loans and credit accounts you have had (installment loans, credit cards, mortgages, retail accounts, finance company accounts, etc.).
- New credit – avoid opening many new accounts or applying for several loans or credit accounts in a short period of time.