Simply put, a credit score is an important number that tells anyone who’s willing to look at it how well you manage credit, and therefore how you manage your finances. The higher the number, the better your history of managing debt and payments on time. Your financial life can be greatly affected by this rating, so understanding what a good or bad score means can make all the difference in seeing success or struggle financially.

The ‘Cheat-Sheet’ for Credit Score Success?

Credit scores come in many shapes and sizes, but most have something in common with their measurements – 300 is usually considered to be very good, while below 100 is poor. If you had clean credit (no unpaid bills) and no recent inquiries into your credit report within the last 30 days, scoring models like FICO generally consider you to be a good candidate for credit.

You can check your credit score for free on Credit Sesame, or a handful of other sites without affecting the result. If it’s not great, don’t worry – there are things you can do (and likely have to) do by law in order to see improvement over time; The most important thing is that you keep the following in mind as we go through what a good credit score looks like:

Above an 800? You’re doing pretty well in terms of getting approved for loans and having higher limits at stores or banks that may give you cash advances. Not all businesses will want people with these sorts of scores, but those who do will usually also charge less or quicker for goods and services to these individuals.

The average credit score is always a topical conversation topic, simply because it’s not that well-known how one can raise their own, or what exactly a good score looks like today versus 10 years ago (or even just over the course of 5 years).

Above all, it is very important to understand how each credit rating fits into the grand scheme of your financial life because this can help prevent future problems from occurring. We start by explaining the factors that are assessed when calculating a borrower’s overall scores, which include: the number of accounts they have open; their total debt per account; how many months it has been since the last missed a payment or when their file was most recently updated; the ratio of their amount of debt vs. the total amount of credit available to them (this is known as the credit utilisation rate); and other factors that can affect your scores, such as public records, outstanding judgments and tax liens.

In order to help people out who are looking for a better understanding of the entire process in general – as well as your specific situation – we have put together this simple guide to explain what goes into determining your overall credit score and grade you accordingly. Of course, if your scores aren’t looking quite right there may be other issues at play that need addressing before you start applying for new lines of credit; this means paying off outstanding debt or creating a payment plan, and considering whether it is currently safe for you to take on more credit while you are in the lower range; once you have worked on these other areas, your score should greatly improve.