What is a Good Credit Score? Plus 6 Tips to Improve Yours FAST

I’ve been getting a lot of questions about credit score lately and I figured I address it in detail. It is a very important topic in relation to earning points and miles since the main source of earning those points is credit card sign-up bonuses. So What is the Credit Score Range? What is a Good Credit Score? How to get a Free Credit Report? and most importantly, How to Improve Your Credit Score FAST?!

What is the Credit Score Range?

VantageScore 3.0 and FICO 8, the most commonly used credit scoring models, have a range of 300 to 850 and the higher the score, the better. the data used in calculating credit scores comes from three major credit bureaus: Equifax, Experian and TransUnion.

What is a Good Credit Score?

A credit score of 700 or above is generally considered good. A score of 800 or above is considered to be exceptional. Most credit scores fall between 600 and 750. Credit scores are used by banks lending you a line of credit in a form of mortgage loans, credit cards, or car loans to make decisions about whether or not to offer you that credit. Having a good credit score is important because it determines whether you’ll be qualified for the “loan” you’re applying for or not. And, if you qualify, what type of interest rate will you qualify for, the higher your score the better your interest rate on mortgages, car loans etc. This could mean the difference between hundreds and even thousands of dollars in savings.

Your credit score is not the only thing lenders look at before qualifying you for a loan; it might be an important one. However, other things like the amount of debt you have and your income to debt ratio are a huge part of the decision making as well.

I’ve discussed the factors that affect your credit score in detail in a previous post. Here’s a quick snapshot for reference:

• Payment History (35%)
• Amounts Owed (30%)
• Length of Credit History (15%)
• New Credit (10%)
• Types of Credit in Use (10%)

How to get a Free Credit Report?

Many credit card companies offer you a free credit score like American Express, Citi Bank and Discover. But my favorite place to get a detailed free credit report is Credit Karma.

While there’s always been a misconception that applying for multiple credit cards affects your credit score negatively, this is not necessarily true in all cases. Applying for new credit cards might actually help in building up your credit score. You wouldn’t think a person like me – who opened over 30 credit cards over the last 3 years – will have a credit score of almost 800 huh? 🙂

Now to the best part of this post.

6 Tips to Improve Your Credit Score FAST

• Check Your Score

  • It’s very important to check your credit score regularly and always track your progress. It’ll keep you motivated as you’ll see what you’re doing well that’s pushing your score up and you’ll keep doing it.

• Check your credit report for inaccuracies

  • If for any reason you find incorrect amounts owed or delinquencies on your report, make sure you call your credit issuer and ask them to correctly report your account to the credit bureaus.

• Pay your bills on time

  • Allows pay your bills on time. Even if you’re only paying the minimum amount you still should always pay on time if not earlier. Also, if you accidentally missed a payment within the last 30 to 60 days and are able to pay the full balance; call your credit card company and tell them you want to pay your bill in full. When you do, also ask them to reverse the delinquency on your credit report.

• Pay off Debt

  • Always try to pay as much as you can every month to reduce your debt. Set a goal of having your debt not to be more than 30% of the credit line extended to you.

• Open a New Credit Card

  • Opening a new card may cause your score to drop by a couple of points but on the long run it goes back up. If you only have 1 credit card with a $10,000 limit and you use $5,000 that means you’re at 50% utilization which will lower your score. But if you open another card that has $10,000 and you still only average $5,000 in spend then your utilization becomes 25%; which is lower than the target of 30%.

• Become and Authorized User – Instant Credit Booster!!

  • If your parent or friend or spouse add you as an authorized user on their credit card account that they’re maintaining properly, you automatically adopt their good credit and it reflects on your own credit score. This is probably the fastest way to improve your credit score.

Bottom Line:

Your credit score is a very important tool and you should always be mindful of it and how you use it. Credit card applications spread carefully over time shouldn’t hurt your credit score on the long run. But always make sure that your applications and expenses are reasonable and within your means. Don’t overspend and always pay your balances in full and on time and this will result in your credit score and your points and miles balances to flourish and prosper.

If you have any questions, comment below or tweet me @pointspointers or email me at ramy@pointspointers.com

SUBSCRIBE to my New YouTube Channel HERE. Videos with credit card points and frequent flyer miles tips and tricks released every THURSDAY at 12 PM Eastern Time.