The Perfect Score: What’s a Credit Score and How Do You Get a Good One?

The global pandemic has changed the way the world functions. Social distancing has become a way of life, whether people like it or not. During these trying times, it has become a necessity to prioritize health and avoid contact with people along with thorough handwashing and sanitizing to minimize the chances of the virus spreading. For introverts or people mostly having to live alone by themselves, this lifestyle is still somewhat easier to adapt to. But for the social butterflies, it can be stressful. However, most of the world is having to adapt to this drastic change – which can be very depressing. This is the perfect time to look out for your family and friends and assure them that they are not alone in this. That despite being cooped up in your house, you are still hoping for the best outcomes of social distancing. Here are several ways you can bide your time at home and connect with your friends and loved ones, with a little bit of creativity:

Money is one of the essential things in the world. Let's face it, without money, we won't be able to buy a lot of things that we need and want. Most of the time, we can get into situations wherein we have something we need or want but don't have the money. One solution to that problem is to work hard and save up for that something.

However, what if that need is urgent? What if it's an emergency? What if we don't have a job or a means to get that need? For such a need, we need to borrow money. Borrowing money is by no means a shameful act. In fact, borrowing is a necessity. The world of finance and spending wouldn't exist if not for loans and borrowing.

With that said, can everyone just borrow whatever amount they want? The answer is a resounding no, but it's a bit complicated as well. There are set amounts in which you can borrow money. And you also have to have a good credit score. Without a good credit score, you might have a difficult time getting a loan approved. So what is a credit score, and how do we get a good one? Here are some tips and a bit of knowledge about this significant number:

What's a Credit Score?

A credit score is usually a three-digit number that says a lot about a borrower's creditworthiness. Credit scores range between 300-850, with 300 being the lowest score. Credit scores are based on credit history. This fact means that how you deal with loans and bills, the way you pay them, how long you pay back, any delinquencies, etc. are factors that can determine your credit score.

Here's a look at what credit scores are, based on the FICO or the Fair Isaac Corporation scoring system:

• Very Poor - 300-579
• Fair - 580-669
• Good - 670-739
• Very Good - 740-799
• Exceptional - 800-850

Each score range has its perk or disadvantage. Those who have scores of 300-579 are considered high-risk and often have their loan applications denied. Scores of 580-669 are considered subprime borrowers. Given the right or wrong conditions, people who have these scores can have a hard time getting their loan approved.

Good borrowers or those who have 670-739 credit scores seldomly fall to the bottom range. A score of 740-799 puts in better rates when loaning. Exceptional borrowers, however, have priority and the best rates possible when taking out a loan.

As you can see, credit scores matter when you want to take a loan. With that said, you have to know how to get a perfect credit score. Here's how:

Paying Bills on Time

As mentioned above, one of the factors that will affect your credit score is your behavior when it comes to paying bills. Waste disposal, water, gas, electric, internet, and even cable TV bills, all fall under utility bills.

Depending on the length and amount, if you're behind on paying some of these bills, it may affect your credit score. Make sure to make timely payments. Advances are also encouraged as you can be avail of discounts and other special privileges.

Having Credit Cards

Most people avoid credit cards because of the dangers associated with owning one. However, owning a credit card, let alone owning two or more, can actually help improve your credit rating. Do be careful as having multiple credit cards can raise or drop your credit scores.

As long as you're paying your bills on time and don't carry a balance on each of your cards, you'll be fine. Not only will you see a positive impact on your credit score, you'll also save up more on purchases since you're not paying interest, given that you're paying in full.

Asking for Lower Rates

Although asking for a lower rate from your lenders is a thing most people don't do, always try. There's no risk in trying. If you get approved, you'll have lower rates and end up saving more. When you save up more, you'll have no problem with other payables, thus indirectly improving your credit score. What happens when you don't get approved? Nothing at all!

Don't Check Your Rating All the Time!

It may be a good idea to have a constant update on your scores, but trust us, it'll only lower your credit score. Making hard inquiries on your credit scores can significantly lower your scores. What you should do instead is check it annually and see if there are improvements.

Going Soft

If you do have to check your credit scores, then opt for a soft inquiry. Hard checks cause your credit score to fluctuate. When it comes to credit scores, consistency is key. Lenders might not find it in their best interest to lend money to a person with such issues.

A soft inquiry, however, has no such effect on your credit scores. Take note, both soft and hard checks on your credit scores will appear in your credit history, which will also become factors for lenders to consider.

Takeaway

Credit scores are important factors in determining if you can borrow or not. The better the credit score, the easier it is for a loan to get approved. Not only does it ease approval, an exceptional credit score means lower rates, which results in more savings. The tips mentioned above can help you attain a good, if not, perfect credit score.