What Is Considered a High Credit Score?
There is no secret that lenders look for customers with a high credit score to offer loans. A high credit score is achieved by making payments on time and managing credit. It takes a great deal of hard work and dedication to maintain a high credit score. Consumers who want to increase their chances of receiving a loan try very hard to increase their credit score.
A High Credit Score
A high credit score is considered to be a score that is 700 or above. Some consider a credit score of 720 or above good credit. In order to receive the best credit offers possible, consumers should strive to raise their credit score as close to 850 as possible. Very few people attain credit scores as high as 850. A high credit rating is a clear indicator that consumers are capable of handling and repaying credit.
Why a High Credit Score
A high credit score can eliminate many people who wish to receive credit. The majority of the population is not in the high credit range. Lenders know this fact, and they created the lending requirements to reflect this fact. They do not want to take a chance with someone who has not proven their creditworthiness by offering them credit.
In some cases, lenders may still offer consumers without high credit a loan but at a hefty price. Lenders love to lend to consumers who are desperate for credit. They offer these consumers unusually high interest rates on the credit that they receive. A consumer with a high interest rate may receive 0% interest on their loan while the consumer with bad credit may receive 24% interest on their loan. Banks and other financial institutions make an enormous amount of money on customers with low credit score. In all actuality, lenders would not make as much money as they do if it were not for consumers with bad credit.
Consumers with high credit scores save more money on almost all of their credit purchases. They receive very low interest rates on their loans—if they pay interest at all. For example, a lender who pays off a $10,000 loan in 2 years instead of 3 years saves a great deal of money. Those with high credit scores may likely pay their bills off before the terms are met. Consumers with a high credit score help financial institutions remain in business because they pay their bills on time.
The easiest way to lower a high credit score is to pay bills late, default on loans, and max out debts. Even if lenders pay their bills on time, they can still lower their credit score with too much debt. With the exception of big purchases, consumers should not apply for more credit than they can afford to pay off in a short amount of time.
A high credit score is likely everyone’s dream. Many people can attain a high credit score by making a few minor adjustments in their bill payment and credit situations. Consumers must remember not to get in over their head with debt so that they can maintain their high credit score.