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What Is Considered an Excellent Credit Score?

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Do you have an excellent credit score? A lot of people can achieve good credit scores by practicing responsible financial habits, such as making on-time payments, but it takes a little extra knowledge — and some credit card savvy — to take your credit score from good to excellent.

Is having excellent credit worth it? Absolutely. Credit scores make up a huge part of our financial lives, so it’s to your advantage to learn how to get your credit score as high as possible—and getting an excellent credit score is just about as high as you can go.

How do you know if you have excellent credit? What is an excellent credit score and is there an easy way to get it? Let’s take a closer look at what is considered an excellent credit score, as well as what you can do to boost your credit score into the excellent range.

What is an excellent credit score?

According to the FICO credit scoring model, an excellent credit score falls between 800 and 850 points. FICO, or the Fair Isaac Corporation, operates one of the most popular credit scoring systems in the industry, and myFICO.com reports that over 90 percent of top lenders use FICO credit scores to help them make lending decisions.

If your credit score falls within the excellent credit score range, your credit is as good as it gets. Yes, you could try to achieve a perfect credit score, but you don’t need to actively work on building your credit the way you might if you had fair credit or bad credit. Instead, you can focus on maintaining your excellent credit score by practicing the responsible credit habits that helped you earn your score in the first place, like paying your bills on time and keeping your balances low.

What are the credit score ranges?

What is an excellent credit score range? How does it compare to the other credit score ranges? Here’s a breakdown of the five FICO credit score ranges, including the points that fall within each range:

FICO Credit Score Ranges

Excellent/Exceptional800-850
Very Good740-799
Good670-739
Fair580-669
Poor350-579

The FICO scoring system occasionally refers to the top credit score range as “Exceptional” — but don’t worry, that means the same thing as “Excellent.” If you have excellent credit, you don’t need to do anything else to get exceptional credit. You’re already there!

What are the factors that impact your credit score?

The FICO credit scoring model uses five factors to determine your credit score: payment history, credit utilization, credit history, credit mix and recent credit applications. Let’s take a closer look at how each of those factors impacts your credit score:

Payment history (35 percent)

This is your history of on-time payments. If you have excellent credit, you’re probably very good at making on-time payments — but if you ever accidentally miss a credit card payment, act quickly to keep it from affecting your credit score. Making on-time payments consistently is one of the best ways to maintain a stellar credit.

Credit utilization (30 percent)

Your credit utilization ratio is the amount of credit you’re currently using compared to the amount of credit available to you. If you have excellent credit, you probably have a lot of available credit because you keep your balances low or pay them off in full every month. That’s great for your credit score. Keeping a low credit utilization — below 30 percent at least, but ideally within single digits — is another surefire way to keep a strong credit standing.

Credit history (15 percent)

This is the age of your open credit accounts. If you’ve been successfully maintaining credit accounts for a long time, your credit score is likely to get a boost. This is one of the reasons why it’s a good idea to keep old credit cards open even when you are no longer using them regularly.

Credit mix (10 percent)

Your credit mix is based on the different types of credit accounts under your name. If you have both revolving credit (like credit cards) and installment loans (like a car loan), your credit score could go up.

Credit applications (10 percent)

Your credit score is also impacted by your recent credit applications. If you apply for a lot of credit all at once, lenders might wonder if you are planning on going into a lot of debt — and whether you’ll be able to pay off that debt in the future. This is why hard credit inquiries, which occur every time you apply for a new credit card or loan, can prompt a temporary drop in your credit score.

Steps to improve your credit score

If you want to learn how to get an excellent credit score — or if you already have excellent credit and want to work toward that perfect 850 — here are some steps you can take to improve your credit score.

Start by making on-time payments every month, if you aren’t doing so already. Since 35 percent of your credit score is based on your payment history, making on-time payments is one of the best things you can do to boost your credit score.

Next, start paying down your balances. The lower you can get those balances, the more available credit you’ll have — which is good for your credit utilization ratio and even better for your credit score. As the Washington Post reports, people with perfect credit scores have an average credit utilization rate of 4.1 percent. That doesn’t mean they never use more than that much of their available credit; it just means that they pay those balances off every month, and keep any revolving balances very low.

You can also increase your available credit by requesting a credit limit increase or applying for a new credit card. If your credit already falls in the Very Good range (740-799), going online and requesting a credit limit increase on one of your existing credit cards might give you the point boost you need to take you over 800.

Lastly, you’ll want to track your credit score on a regular basis — here is our advice on how to get a free credit score — and review your credit reports to ensure that all of the information is accurate and up-to-date. Understanding how your credit score fluctuates based on your outstanding balances, new credit applications and overall credit history can help you make adjustments that will benefit your credit score both now and in the long run.

Benefits of having excellent credit

There are numerous financial benefits of having excellent credit. When you have excellent credit, you can access the best credit cards on the market — including the top travel credit cards, the best cash-back credit cards, the best credit cards for dining out and more. Your excellent credit score will make you an ideal candidate for luxury credit cards like the Chase Sapphire Reserve® card or The Platinum Card® from American Express.

Excellent credit score credit cards generally offer lower interest rates, thanks to your strong credit history. When lenders trust you to pay back your debt promptly and responsibly, they have less of an incentive to charge high interest rates — which means you can expect to receive lower interest rates not only on your credit cards, but also on auto loans, personal loans and mortgages.

Plus, your excellent credit will never stand in the way of your ability to rent an apartment, open utility accounts or — if your employer checks credit before hiring — get a job.

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10 things you didn’t know will help you get a mortgage

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Anyone who wants to apply for a mortgage right now will know that it’s not easy. Coronavirus has made the process of applying longer, while lenders are now more careful than ever about who they will lend to. You probably already know that having a healthy credit score is essential to a successful mortgage application, but how can it be achieved? Personal finance experts from Ocean Finance  weigh in with the top tips for making sure your application is a success – that you may not have heard about. 

1. Make sure your name is on all household bills

If you share a rental, it can be tempting to let someone else put their name down on the utility bills and just pay them back. If you want a mortgage, avoid doing this: bills with your name and address on them are proof that you pay them on time. This especially applies to the rent itself – never move into a house share without your name being on the contract. Before applying for a mortgage, ask your landlord for a letter confirming that you pay on time. 

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How Can I Prequalify for a Personal Loan? A Guide

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When you are in need of money quickly, you very likely don’t want to sit around pondering a bunch of different options. You want to find the option that works best for you and utilise it. Unfortunately for so many people around the country, it can be difficult to get their hands on the money they need due to them having a bad credit score, or even no credit score at all.

How Can I Prequalify for a Personal Loan?

Photo, Varun Gaba.

Your credit score is thought of as being pretty important, as it shows your financial trustworthiness to financial institutions like banks, credit card companies, lenders, and more. Your credit score is one thing that will usually be considered by just about any company you apply for a loan through, so keeping a close eye on your credit score is imperative for your financial life.

No matter what your credit score looks like, knowing how you can prequalify for a personal loan can be a comforting feeling when you are in need of quick cash. After all, when you are eligible for personal loan prequalification, you feel a little better going into the loan process knowing you won’t have to wait around for a loan decision.

How is Pre-qualification Decided? Prequalifying for a personal loan can depend on several different factors that you will have to keep in mind, and it will vary greatly depending on the lender you are applying through. Here are two of the things you will need to keep in mind when it comes to your loan that could affect whether or not you prequalify for the loan.

— Your credit score; Yes, this is always going to be something you are going to need to think about. Depending on the financial institution or lender you are going through, you can bet that your credit history and score will play a huge part in whether or not you prequalify.

— The amount of your loan; How much money you plan on borrowing from the lender or bank is also going to play a part in deciding whether or not you prequalify.

To get the most out of your search for a lender that you could prequalify with, think about applying with more than just one lender. This way, you might get several pre-qualification offers, and this will allow you to sort through the lenders and decide which one works best for you.

How Can I Prequalify for a Personal Loan?

Photo, Christina @ wocintechchat.com.

The Pre-qualification Process: No matter where you are trying to prequalify for your loan through, you will find the process to be pretty simple and largely similar across most lending platforms. You will need to provide some information to the lender that will help them decide whether or not to prequalify you.

How Can I Prequalify for a Personal Loan?

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Some of the information you will need to provide includes:

— Your full name; You will want to make sure you provide your full legal name so you can make the process simple for yourself and the lender. Depending on the lender, you might also be asked to provide images of your government issued ID or driver’s license to validate your identity.

— Your income and information on your job; Your income and employment status are often considered over your credit score when it comes to pre-qualification for loans, especially if you are applying for a personal loan through a lender who deals with customers with bad credit or no credit.

— The loan amount you want; Of course, you will have to include the amount of money you would like to borrow. Make sure it is something reasonable, and something that you can realistically pay back on time.

What Will the Lender Do? If you are trying to prequalify through a lender who specialises in bad credit clients, then you won’t have to worry about your credit score being negatively affected by taking out your loan. However, if the lender reports to the credit bureaus, your payments could still make an impact on your credit score.

If not working with a specialised lender, you might find that the lender will do a soft inquiry on your credit when going through the pre-qualification process. No worries here, as this doesn’t put any dents in your score. If you prequalify for the loan you are looking for, you should get an alert via email from the lender of your choice.

The Money You Need: Hopefully, you will have prequalified for the loan you are looking for so you can ensure you have access to the money you need, when you need it. Whether you’re going through some unexpected circumstance in life or just need money to pay something off quickly, knowing you are prequalified for the loan you need is a comforting feeling, allowing you access to the cash you need for whatever you need it for.



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Are No Down Payment Auto Loans Bad?

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Qualifying for a zero-down car deal likely means having good credit and qualifying income. However, if you’re a bad credit borrower, you’d be hard-pressed to qualify for an auto loan without a down payment. Besides – down payments are typically a great idea for borrowers across all credit ranges!

Is Zero Down a Bad Idea?

Opting for a zero-down car loan isn’t a bad thing – but with a lower credit score, it’s not likely to happen. Most bad credit auto lenders require at least $1,000 down or that you bring at least 10% of the vehicle’s selling price to the table. Down payments are a requirement of most subprime (bad credit) lenders, and it’s often called having “skin in the game.”

Are No Down Payment Car Loans Bad?Research shows that borrowers with skin in the game are more likely to complete a car loan. To a lender, a borrower that brings a down payment to a deal is more likely to make their payments, complete the loan, and avoid default. It also means a higher likelihood of qualifying for the auto loan.

Down payments can widen your vehicle choices since they allow you to get into more expensive cars that are outside your preapproval amount. If you’re approved for a $15,000 auto loan, but can’t find anything for your situation, adding a larger down payment amount may open up more vehicle choices. In this scenario, if you have your heart set on an $18,000 vehicle, coming in with a $3,000 down payment could put it in your price range.

More Down Payment Benefits

Auto loans are typically simple interest loans, meaning you’re charged interest on the principal of your loan. If you combine a large loan amount, a high interest rate, and a long term, it can mean paying more than your vehicle is worth.

Remember this:

High loan amount + High interest rate + Long loan term = Paying more interest charges. A down payment can combat this, and help save you money.

For borrowers with poor credit, a high interest rate could mean paying more for your auto loan – but a down payment can soften the blow.

Down payments can help protect you from negative equity, too. Negative equity is when you owe more on the auto loan than what the car is valued at. Vehicles are depreciating assets, meaning they lose value over time, and that never stops.

Negative equity causes problems for borrowers when it’s time to sell the vehicle. If you owe thousands more on the loan than what you can sell the car for, you may not be able to sell the car. You must pay off the loan before you can transfer vehicle ownership.

If you finance a vehicle for $10,000, that car may not be worth $10,000 in a year. Most used vehicles lose around 10% to 15% of their value each year. Brand new vehicles can see around a 20% drop in value within the first 12 months of ownership! Having a down payment can help keep your auto loan in an equity position, which means you’re likely to have fewer issues selling the car if you need to.

How Much Should Save for a Down Payment?

Your down payment requirement largely depends on your credit score and the size of the loan you’re applying for. Like we mentioned, saving at least $1,000 is probably a good starting point if your credit score is less than perfect. But if the vehicle you want is expensive, it could mean having to shell out more cash than that to qualify for the loan.

How much you need to save can also depend on your monthly budget. If you want a specific vehicle but the monthly payments are too high, you can put more cash down to lower your payment and make the loan work for your situation. You can use our auto loan calculator to estimate how much you may need to put down to get your car payment where you want.

You also don’t need cold, hard cash to meet a down payment requirement. Trade-ins with equity can completely satisfy a down payment requirement if there’s enough value, or you can use a combination of cash and your trade-in. If you have a car you’d like to trade in, research its estimated value on sites such as NADAguides and Kelley Blue Book so you can see what a dealer may offer.

The bottom line with down payments is you should save as much as you comfortably can afford. Even if you qualify for a zero-down car loan, putting cash down on your next auto loan is only going to bring you benefits in the long run.

Where Can I Find Bad Credit Car Loans?

If your income or credit score isn’t quite up to snuff, then you can expect to need some cash down to qualify for vehicle financing. You may also need to work with the right auto lender to get the vehicle financing you need.

With a lower credit score, not only are you faced with a down payment requirement but also the struggle of having to find an auto lender that can work with poor credit. Most traditional auto lenders prefer borrowers with good credit. If your credit score is rough around the edges, then applying for vehicle financing through a special finance dealership could be the way to go.

Special finance dealerships are signed up with subprime lenders. These lenders specialize in assisting borrowers with credit challenges and look at more than your credit reports and score. They do require a down payment, but they can often work around tough credit circumstances.

At Auto Credit Express, we’ve amassed a nationwide network of special finance dealerships and we want to help you find one in your local area. To get matched to a dealer near you that has bad credit lending options, fill out our free auto loan request form.

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