Nowadays it’s very important to have at least a fair credit score to be able to get credit or loan from the bank easier. Our credit score allows us to lend money with lower interest rates which helps us to save some money. Having a low credit score may result with higher interest rates or even a denial from your credit or loan application. Therefore, it is important to have a good relation with bank and make sure that you are paying your payments without delay.
What is a Fair Credit Score?
The most common way to calculate the credit score is to use the FICO Score. FICO Score refers to Fair Isaac Corporation which is the founder of the scoring system. The scores range between 300 to 850 and most of the lenders use the FICO score in order to decide which level the borrower is at. The fair credit score ranges between 580 to 669 at the FICO Score. Approximately 17% of the American people are on fair level based on the FICO score. Compare to other score ranges which are very poor, good, very good and exceptional, fair score comes right after very poor which means that it is the 2nd worst score out of all the scores.
Is Fair Credit Score Enough?
As mentioned above, fair credit score is only above the very poor range which means that it is more difficult to get a lon or to pay higher interest compare to higher score levels. The lenders usually see the fair level borrowers as sub-prime. Sub-prime refers to a higher than average interest rate. Which means that you have less advantages compare to someone who has a better score. It is very important to have higher credit scores because it brings many advantages when a borrower wants to take out a loan or credit from the bank.
How To Improve Credit Scores?
Improving your credit score is not a magic. There are certain things you can do to increase your score which eventually allow you to have loans with better interest rates. To improve you credit scores you should:
- Paying your bills and paying them on time is one of the most important criteria to increase your score. Having a clean background on paying your bills will have a great effect on your score.
- Try not to apply at many different credit lines at a single time. It is always better to apply to credits when you need them.
Having a high level of credit score will allow you to get the credit card with higher limits and lover interest rates, get the loans and mortgages with lower monthly payments and lower interest rates and help you to access the money you need easier. That’s why you should always try to increase your score to be able to get more advantages. Even though fair credit score will most likely to get you a loan, the interest rates will be higher than average and payments will be higher, that’s why try to improve your score and don’t get stuck at fair credit score.