A good credit score is simply a rating applied to a potential borrower of credit that tries to define whether that person is low, medium or high risk with regard to offering credit. Credit scores vary from company to company, country to country. However, somebody with a good credit score will attract better interest rates and benefits upon application than somebody with a poor credit score. Additionally, the former will more likely succeed in a credit application than the latter.

Credit ratings are applied by credit bureaus and agencies such as Experian. By collecting data from a person’s credit history, an estimated rating is applied from judging how that person has behaved in maintaining previous credit accounts and from other personal data.

Maintaining a good credit score is becoming more important as time goes by. Traditionally the data was used by a prospective lender in order to help determine whether offering credit was a risky proposition, Nowadays, however entities such as insurance companies and even employers are looking at credit scores and credit history.

A few problems arise when trying to obtain a good credit score. Firstly, no credit agency fully reveals how the ratings are calculated and secondly, there are many difference credit scoring models throughout different areas of the world and even within the same countries and counties. Different creditors look for different factors and this makes improving a credit score difficult. Though it is not an exact science, there are many generally accepted methods to improve credit ratings overall. It is important to obtain a higher rating as possible in order to improve the chances of obtaining credit for the future, whether it be for a mobile phone contract or a mortgage.

As already mentioned above, formulas for a good credit score vary, however some basic criteria outlined below can be very beneficial to a good credit score:

  • Solid payment history
  • A mixture of credit types
  • A low level of recent credit applications
  • The percentage of available credit a person is currently using
  • The length of a person’s credit history

The first step of obtaining a good credit score is to find out the exact state of a person’s existing credit rating. This will give good insight into whether a future application may be accepted or if the same application will be declined, reducing the credit score even further.

With world society counting on credit more all the time, it is important to maintain a good credit score should it be needed in the future for any product or service. Furthermore’ with businesses such as utility companies and employers viewing people’s credit score, it can only be beneficial to gain a positive credit rating or even improve on an existing credit score.