Do You Really Need a Perfect Credit?
October 29th, 2009 | debt repair articles |
We often hear the importance of building good credit and striving for a high credit score. A higher credit score gives you the power to bargain with your creditors, ask for better rates, and instantly get an approval. But do you really need a perfect credit score? Will a few points in your credit score really make a big difference in your life?
Understanding the FICO Scoring System
Today, the three major credit bureaus, lenders, insurers and most financing companies use the FICO score in determining one’s credit worthiness. The FICO score ranges from a very low of 300 to a very high of 850. Let’s consider how your FICO score is calculated and how it can affect your status as a borrower in the eyes of your creditor.
Lenders have different standards in measuring a prospective client’s credit worthiness. For some creditors, a score between 775 to 850 is considered as excellent rating while other creditors may consider 750 as the cut-off for an excellent credit.
So do you really need to reach a perfect score of 850 just to be considered as an excellent borrower? Technically, no. As long as your score falls in between 700 to 850, you will be getting the same rates that are given to people with excellent credit. In fact, statistics prove that it is very rare for someone to achieve the perfect credit score of 850.
Nevertheless, if your credit score falls even just one point below 700, you will be charge with rates that are given for people with average credit. In this case, you want to make sure that you improve your credit at least a few points above what is considered as excellent score.
Continue Reading: Do You Really Need a Perfect Credit?
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