The lowest credit rating in this range is 300, but it is almost impossible to find someone with such a low score. Generally, a score below 580 is considered bad credit, while a score of 720 or higher is considered excellent. A score between 690 and 719 is considered good credit. If you want to increase your chances of qualifying for loans and get a lower interest rate, there are four steps you can take to improve your credit rating.
A credit score is a three-digit number, usually on a scale of 300 to 850, that estimates the likelihood that you will repay the borrowed money and pay the bills. Most lenders will check your credit when you apply for an account, and very few lenders will approve it with such a low score. Even if you have a good credit score, lenders may still deny you if they think there are risks, such as your inability to pay. Borrowers with scores above 750 or higher often have many options, including being able to qualify for 0% auto and credit card financing with 0% introductory interest rates.
The two main credit rating models, FICO and VantageScore, consider the same factors but weigh them differently. There are several ways to build up credit when you're just starting out and ways to increase your score once it's established. This can happen even if you have established credit in the past; if your credit report shows no activity for an extended period of time, items may “fall” out of your report. Credit reporting agencies collect data and compile it into their credit reports.
Credit utilization, or how much of your credit limits you are using, is weighted almost as much as paying on time. Once you receive your card, you can use it to improve your credit score and, once you have proven that you are a responsible borrower, your issuer can allow you to switch to a regular credit card, at which point they will refund your deposit. You may be entitled to additional free credit reports in certain circumstances, such as after placing a fraud alert, becoming unemployed or receiving public assistance, or having been denied credit or insurance in the past 60 days.
