Your credit score determines the level of loan and financial properties you can acquire. With an average credit score, there is a tendency you would be limited to qualify for a high level of a loan of financial products.
Although it is better to have an average credit score than a bad one it shouldn’t stop you from aiming for a higher score. This article will teach you what an average credit score is and the rate of interest rates you could get with it.
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What is a Credit Score?
You ought to know what a credit score is, for you to know what it means to have an average score.
A credit score is usually a three digits number used by lenders to determine whether you get a mortgage, a credit card, and other credit lines available and the rate of interest to be charged by your level of credit.
Some factors determine the level of your credit scores such as the number of bank accounts you have, levels of debts, debt payment records, and more.
People usually ask questions like, what is a good score? And others. Keep reading this article to know.
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What is the Average Credit Score?
The average credit score of FICO differs from the Vantage score. Below is the credit range for FICO and Vantage:
FICO score
- Excellent: 800 to 850
- Very good: 740 to 799
- Good: 670 to 739
- Average: 580 to 699
- Very poor: 300 to 579.
Vantage scores
- Excellent: 781 to 850
- Good: 661 to 780
- Average:601 to 660
- Poor:500 to 600
- Very poor: 300 to 499
Several things are used to score you to get your exact score. The scoring model of FICO and vantage vary to take a look at them below:
FICO
- Payment history
- The total amount you owe (credits and loans)
- Length of credit history
- New credit
- Credit mix ( credit cards, installment loans, mortgage loans, and others).
Vantage score
- Total credit usage, balance and available credit (highly influential)
- Credit mix and experience (highly influential)
- Payment history(moderately influential)
- Age if credit history(less influential)
- New accounts (less influential)
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How to Improve Your Credit Score
They are ways you can improve your score if it’s an average score or lower. Below are the procedures:
- Ensure you pay your minimum and debts on time as late payment can reduce your credit scores which will last for about seven years on your credit report.
- Maintain your credit card balance on a low level. The credit utilization rate is extremely vital in adding up or reducing your credit score. It applies in comparison of your current balance and credit limit of your credit card. It is important you have a low credit utilization rate to help boost your credit score.
- Have your credit accounts, added to your credit report. They ought to be installment accounts, such as student, auto, home or personal loans, or revolving accounts, such as credit cards and lines of credit.
- It us important that you apply for credit when it is needed by you. Applying for a new account could reduce your score as it will lead to hard inquiry. Furthermore applying for a high number of loans and credit cards at a short period of time would greatly reduce your credit score.
Information That Credit Scores do not Consider
In calculating credit scores there are factors that aren’t contemplated both by FICO and vantage:
- Your religion, race, origin or color
- Marital status or sex
- Age
- Your income, occupation, employer, date employed and employment history
- The area where you live
- Soft inquiries like promotional offers by companies on credit, reviews of your previous credit accounts by your lender.
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Conclusion
If you have gone through this article you would find out it’s better to have an average credit score instead of a bad one. Though it may not get you a high-level amount of loan it’s better than a bad credit score which would amount to nothing.
Well, all hopes are not lost if you follow the guidelines of having a higher credit score indicated in this article you sure would be on your way to a higher level.
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