Individuals are forever on a spree to manage their wealth effectively and want to have control over their finances. In this process, it is of utmost importance to maintain creditworthiness. This essentially means being in a financial position that makes one reliable enough to receive financial credit from a credit repair expert. This can be judged majorly through past instances of paying back money to creditors. The reason behind maintaining creditworthiness or rather the pros of doing so are immense. Among the plethora of benefits that a good credit score offers, the most important ones are higher eligibility for loans and credit cards, lower rates of interest, higher credit card limits, quicker loan approvals, added weightage to visa applications. Thus, it is important to maintain a good credit score throughout to be able to get good credit opportunities.
To shed some light on what is a good credit score, one needs to know what is exactly meant by a credit score. A Credit score is a financial tool that helps lenders assess the creditworthiness of an individual. It is used by lenders or banks to evaluate the risk associated with providing credit to an individual and hence, it shapes their decision regarding extending credit.
Credit scores are only for individuals while another tool called credit rating is for businesses, organizations, governments. A Credit rating is a tool to measure creditworthiness for companies. There are various credit reporting agencies such as the Standard & Poor’s, Moody’s, and Fitch which assign credit ratings to companies from the range of AAA to D which signifies very good credit rating and poor credit rating respectively.
Coming back to credit scores, there are three main credit reporting agencies in the United States namely Equifax, Experian, and TransUnion, which assign the credit scores. These credit scores range from 300 to 850. These scores are derived using the FICO (Fair Isaac Corporation) credit scoring.
It should be noted that individuals don’t start directly with a good credit score. In fact, a good credit score is built over time.
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