My experience!

What is a good credit score? How do you achieve it? And once you have determined your score, can you do something to improve it?

Creditworthiness is one of the most important factors for financial institutions to determine which loan applications are worth approving. If you can maintain a good credit standing, then you are proving your creditworthiness to these loan lenders. You might ask, what is a good credit score? As per FICO computation model (FICO stands for Fair Isaac Corporation), a 700 score is in the safe zone. Anything above it is considered a good score. There are certain factors that influence your overall score. Each of these factors accounts for a percentage in your total score.

Payment history eats the biggest pie with 35 percent of the total score is based on retail purchases, credit card and utility bills payments, and debt repayments. Public records such as filed bankruptcies also belong to this category.

Available credit places second, with 30 percent of your total credit score is comprised of outstanding debts and credit balance. One must take into consideration that having outstanding bills does not necessarily equate to bad credit score. You can even improve your credit standing if you are persistent when it comes to payment. Other factors include the length of credit history (15%), types of credit (10%), and newly opened credits (10%).

Please note that this computation model only serves as a mere guide as lenders tweak generally accepted computation methods to suit current financial trends. With these factors, it would be easier to distinguish what is a good credit score from a bad one.