Finance Debt

When is your credit score “good enough”?


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While having a low credit score definitely affects your ability to get loans at reasonable rates, it doesn’t really matter what upper range your credit score is. In fact, trying to increase your score beyond a certain range is a waste of time if you’re trying to get the best interest rates.

Anything above a credit score of 760 doesn’t really matter

It’s easy to obsess over your credit score, but you only really use it when you apply for credit, like when you want to finance a house or a new vehicle. That’s not to say that credit scores don’t matter, of course, because a lower interest rate can mean save thousands of dollars on interest payments alone. But it’s important to keep your credit rating in perspective, especially if you already have good credit habits and are paying off your debts on time.

In fact, a FICO score above 760 doesn’t really matter to lenders because anything beyond that will already qualify you for the lowest possible rate, what lenders call their ‘prime rate’. . As financial expert John Ulzheimer explains to CNBC“The best published interest rates for auto loans are 720 and over and for mortgages 760 and over. As such, I always tell people, shoot for 760 or better. This way they are safe for all types of loans and cards.

How to increase your score up to 760

People with excellent credit scores share the same habits. These include:

  • Make regular payments on time every monthbecause avoiding late payments represents 35% of your total credit score. One late payment can lower your credit score by 100 points for many months.
  • Have a good credit mix: Your credit combination determines 10% of your credit score, so various open credit accounts: credit cards, facilityfinancing loans, and mortgages — can help improve your score.
  • Using only a fraction of your credit each month: Super prime borrowers only use 5.7% of their available credit. The less you use, the better, because using credit accounts for 30% of your credit score.
  • Have very old lines of credit: Your credit history – the length of time you have open lines of credit – makes up 15% of your credit score.

For more practical tips on improving your credit score, check out this article from Lifehacker.


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