What are 100 points when it comes to your credit score? After all, the rating scales go up to 850, so it isn’t a huge amount, right? Wrong! When you have a low personal credit score, that 100 point credit score gap can seem so much bigger. In some cases, it is a difference of two whole tiers on credit rating systems. Keep reading to learn more about how your credit score is determined and the benefits you’ll see with a 100-point credit score improvement.
Why Your Score Matters
Lenders use your credit score to determine whether to lend you money or credit. They are compiled by using a formula that looks at several factors. These include:
- The number of accounts you have open
- Your overall debt levels
- Payment history
- Previous judgments, liens or bankruptcies
- The ages of any open accounts
The score you are assigned based on these factors is then used to decide whether to approve or decline a new credit request. They also influence the interest rate you will be charged for borrowing money. In general, the lower your score, the higher your rates are.
There are five main levels of credit: bad, poor, fair, good, and excellent. Roughly 50% of Americans have credit that is either bad or poor, while another 18% have fair credit. That can tell you a few things. First, you are far from alone if you are struggling with a lower credit score. Second, it doesn’t take a lot of credit score improvement to put you ahead of half of the other potential borrowers out there. Think about it for a minute: It is estimated that less than half of Americans have a credit score that is considered either good or excellent. By adding 100 points to your score, you can get closer to or in those higher tiers.
By now, you are probably wondering, “What makes a good credit score?” The scale that most lenders use ranges from 350-850. That is divided into the five main risk tiers. To have a score that is considered good, you need to have a credit score of at least 700. Bumping it up to 750 moves you into the excellent tier, where you will have access to the best rates.
Benefits of a 100 Point Credit Score Boost
While your credit score might not define you, it does play a significant role in what you can and can’t do in life. With poor credit, you may not qualify for loans to buy the house or car you want. Or, maybe you can’t get an increase non your credit card limit. With good credit, those concerns can become a thing of the past. That is why it is so important to take action to boost your credit score. Consider these benefits to raising your credit score by 100 points.
Better Interest Rates
The higher your credit score, the lower your interest rates will be when borrowing money. That can add up to substantial savings over the life of a loan or credit card balance. Lowering your interest rate by 1% can make a substantial difference in several ways. Your monthly payments will be lower, which means you may be able to borrow a larger amount upfront. Or, you might prefer to save that extra money and put it away for a rainy day. Either way, you will take advantage of the other big benefit of lower interest rates: a much lower total amount paid over the life of your loan.
Increased Access to Loans
As we discussed earlier, there is only a 50-point difference between a good and excellent credit score. That means even a small boost can put you into a select group of borrowers. With a credit score of 75 or higher, you will have a much easier time borrowing. From personal loans to credit cards to a home mortgage, lenders will compete to get your applications. As a result, you will be able to pick and choose the best offers for your situation.
Larger Credit Lines
A 100 point credit boost gives you more borrowing power, too. If you want to make a large purchase, or your credit card is nearing its limit, request a credit line increase. Most lenders will be happy to extend the requested amount. A key advantage to this is that you don’t have to go through the hassle of opening a whole new account. It is far easier to request a credit line increase than fill out application paperwork.
Take Charge of Your Credit Score Today
You have the power over your credit score improvement. Making payments on time and being a responsible borrower will go along way to creating a stable record. Utilizing tradelines is another way to achieve credit score improvement. At Coast Tradelines, our tradelines assessment can help get you closer to that 100 point credit score boost. Contact us today to see how we can help you achieve your financial goals.