Do you know what a good credit score is? If you are just about to get a loan, this question will no doubt come up. But while a range of scores may be considered good for a specific loan, there is no fixed number that applies to all types of loans. Depending on the type of loan you want to get, a score of 700 may be regarded as good.
One thing that cannot be overstressed is the value of having a good credit score. For one thing, you would be paying lower interest rates. Let's assume that you credit score is 760. If you get a 30-year fixed mortgage of $300,000, expect to get an interest rate of 4.5% or a little less. You end up paying about $1,520 every month.
What happens if you have a credit score of 620? Don't even try to get a loan with an interest rate below 6%. If you think that difference is minimal, think again. Your monthly payment will shoot up to about $1,800, an extra of about $280 per month!
Having knowledge of what a good credit score is for the type of loan you want to get is important. This will help you tell in advance what interest rate you should expect. Thus, you would be better prepared to negotiate with your lender.
You would have the freedom to compare one loan to another and chose the best on offer. Thus you can get a loan with a low interest rate. This is what I generally advice people to do. Never hurry when finding the right loan. If you have good credit score, by all means compare one offer to another.
What happens if your credit score is really bad, say 360? But there is still hope, so do not despair. There are still lenders who are ready to give you a loan. This will result in two problems: You would have to put down a large down payment as well as pay a higher rate. If that does not appeal to you (who would find that appealing anyway?), then you have the option of repairing your credit score.
It is important that you know what a good credit score is. But you should also know how to repair bad credit. Can you read and understand English? Then you can fix your credit score yourself. You need the right information. Armed with it and used properly, you can raise your score faster than you think.
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