What Is A Good Credit Score?

In this day and age, everyone uses credit. Which means everyone has a credit score.

A credit score can work in your favour if you’re sensible with your money and don’t blow it all on wild nights out. The better you are with your money, the better your score! Alternatively, if you’re badly behaved with your cash, this won’t go unnoticed.

Having a good credit score is pretty important. So, let's delve a little deeper into this!

How Does A Credit Score Work?

First things first, let’s clear up what exactly a credit score is.

Basically, credit is when you borrow money with the promise that this will be repaid. This is often plus interest. Urgh, no one likes interest! But, unfortunately, that’s the way it is most of the time.

It’s safe to say that almost everyone uses credit. Whether you’re applying for a mortgage or any other kind of loan, you’ll probably use credit to pay. This will put you in debt with whoever you borrowed the money from, usually your bank.

To keep track of how you use this credit, various scoring systems have been introduced. The score you achieve will showcase how reliable you are at borrowing and repaying money.

So, if you were thinking you could sneakily behave badly with credit and get away with it, know this won’t work!

Your score will be sure to record any mistakes. If these errors pile up, we’re afraid you’re credit score will pay the price!

What Is A Good Credit Score?

As explained, a credit score is a number that demonstrates your reliability with cash. But what exactly makes for a good score?

The answer to this question isn’t as easy as a simple number. In the UK, there are a few credit rating agencies (CRA) and each has its own scoring system.

Now, it might be a little too confusing to explain all these different systems! So, let’s just take a look at the most widely used.

The most popular CRA in the UK is Experian.

Experian has a range from 0-999. In this system, a credit score of 721-800 is considered fair, and one between 881-960 is good. A score between 961-999 is excellent. So, if you achieve this - a big well done to you!

Of course, you should try to aim for an excellent credit score. But, if not, having a good score is still a job well done!

But why does having a good score matter so much?

Why Is Having A Good Credit Score Important?

You may be thinking, why does having a good credit score matter so much? It’s just a number - right?

Well actually, having a good credit score is important for several reasons. Having one can really open doors for you financially speaking.

This is because a credit score is what lenders use to assess your creditworthiness.

When any lender is looking to offer you a loan, your credit score may be the first thing they inspect. When applying for, for instance, a mortgage, your score will show if you’re a safe bet to lend to.

Besides this, a good credit score can increase your chances of being approved for other loans too. It may even help get you more competitive interest rates on these loans. On top of this, a good score can also help you to be approved for credit cards and higher credit limits.

And if you have a bad one? Well, a poor score won’t make things like withdrawing a loan impossible, but it will make it harder!

How Can You Get A Good Credit Score?

Getting a good credit score is super important when it comes to your finances. But actually, getting a good one isn’t necessarily that difficult!

Let's break down a few simple steps to get you the good credit score you want:

• Stay within your agreed credit limits and don’t max out your card
• Don’t set up new bank accounts too frequently
• Don’t apply for credit too often
• Always pay on time (this is a big one!)
• Don’t miss any payments you owe
• Don’t borrow more than you can afford

If you religiously stick to these steps, maintaining a good score shouldn’t be tricky at all!

Conclusion

Of course, having a good credit score isn’t the be-all and end-all. It won’t always prevent you from doing things like getting a loan, but it does make it a little harder.

Because of this, it’s important to try and achieve (and then maintain) a good credit score.

We know - isn’t it tempting to spend all your cash on clothes and overpriced pints? But you must resist this! A good credit score means not overspending, not applying for credit too often, and remembering to always pay on time!

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