Learn key information about a credit score of 820 how it's calculated, what loans you can obtain, and what you can do to improve your score
A credit score is needed for you to be able to get a loan or credit. The reason behind this is because it will help financial institutions to determine your creditworthiness. They will also see every loan that you made and the payment history that you have. Find out more about it by reading the information below.
Credit scores are calculated based on the proprietary algorithm. This will include the person's outstanding debts, payment history, and the length of the individual's credit history.
Credit scores can range from 300 to 850. The higher the individual's score, the lower the risk. People who have lower credit scores are considered high risk, which will make lending companies ask for more requirements.
About Fico scores
Fair Isaac Corporation is the one who established FICO, and it is one of the most commonly used credit scoring systems today.
According to FICO, 90% of the most reputable and respected lenders today are making decisions according to this kind of credit scoring system. Get to know more about Fico scores by reading the information below.
How are credit scores calculated?
The weight of each of the five categories are; 30% of amount owned, 10% is for the new credit, 15% accounts for the length of credit history, 10% is the credit mix and the last 35% accounts for the person's payment history.
The FICO score takes into consideration positive as well as negative aspects of the credit report. The percentage or the weight of any of the categories mentioned above may differ from a person to another depending upon the information available in the credit report.
The FICO score takes all of the information from your credit report. However, the banks or any other lending institution might look at your income, type of credit and employment history when you apply for a loan or mortgage.
Once a certain lender asks for a client's credit report, they can also ask for the Fico score. Other sources say that your Fico score will include 35% of your payment history, 30% of your credit utilization, and 15% as to how long have you been borrowing.
Explanation of credit score ranges
It is important to know the category that you fall into when it comes to credit score for you to be aware. The range of a credit score can go from 300 to 850. Always remember that the higher your score, the higher the chances of you to qualify for a loan. There will also be instances where a financing company is okay with 650 scores, while the other is fine with a 750 score. It will all depend on the lender itself.
A lender or a bank will check your credit score if you qualify for the application that you are requesting. Here are some of the credit score ranges that you should know.
Bad credit score
People with a credit score below 579 is known as high risks. Foreclosures, poor payment history, and bankruptcies are the reasons why people fall into this category.
Good credit score
A good credit score ranges from 680 to 719. People with this credit score can expect approvals and interest rates that are better.
Very Good
A very good credit score ranges from 720 to 799. People with this credit score is known to be small risks, and they often get loan amounts that are higher than usual.
Excellent
An excellent score ranges from 800 and above. Financial freedom is expected to people with this score.
What does it mean to have a credit score of 820
A credit score of 820 is extremely important. This credit score is good for all parts of your financial life. At a credit score of 820, you are legible for good loans. Good loans are those with low-interest rates. A credit score of 820 and above may seem unreachable for many people, but there is a significant percentage of people who reach the cap. Having a credit score of 820 is rather impressive but not necessary if you want to save money, a range of within 820 is good enough for saving money because you still start borrowing loans with low-interest rates. At 820 you will see tangible results, and you are the person who is considered as having walked through financial freedom. A credit score of 820 is seen as magic credit score that might get you what you want within a financial freedom arena.
Is it achievable?
Reaching a credit score of 820 is realistic. It is a goal that will walk you to 850 and is there within your reach. Remember that you cannot get a credit score of 820 overnight. To build trust with credit companies and lenders that will get your healthy credit report to 820 are things that happen with years as compared to months. Financial advisors will be quick to tell you that you should be prepared for a long run
Saving money with your 820 score
When you have more than you spend, you are considered as having reached financial freedom. Utilize your near perfect credit score to save money. In addition to saving it is rather good to know that a credit score of 820 is a credit for credibility and not a credit for luxury. Work it upwards because you have a few scores to reach your perfect credit score.
Credit cards you can get with a credit score of 820
A credit score of 820 is known as an excellent score, which is why people with this credit score are most likely to get approved when applying for a credit card.
There are a lot of credit cards today and with a credit score of 820, you have the option to choose from the best cards today. If you are one of the many who are wondering on what credit card to get, then the information below will surely give you an idea.
IHG Rewards Club Select Credit Card
IHG Rewards Club Select Credit Card will let you earn bonus points of up to 60,000 after spending USD 1,000 on purchases for the first three months. It has a USD 0 annual fee for the first year and USD 49 after that.
Chase Saphhire Preferred
Chase Sapphire will let you earn bonus points of up to 50,000 after spending USD 4,000 purchases. This credit card is also known to be perfect for travelers for the many traveling benefits that it has.
Car loans with a credit score of 820
Having a credit score of 820 is considered an excellent rating. So worrying about your score of 820 is not something that you shouldn't be thinking anymore.
Car loans with a credit score of 820 is not a problem because you can easily get the loan that you want at the lowest possible interest. A high score means that you can pay off your dues on time, and you don't have that much debt at all. Now if your credit score if 820, then you'll surely enjoy these benefits.
Easy Approval
Applying a car loan is easier because lenders no longer have to investigate on you too much. The reason behind this is because having a credit score of 820 simply says a lot of positive things about you already when it comes to your finances.
Getting Better Offers
By having a good credit score, your options of having better offers are high. So don't settle for the first company that will offer you a deal because there are a lot of financing companies that will surely offer you a better deal.
Mortgages with a credit score of 820
A credit score of 820 is considered to be excellent. With this score, you can expect to get the best possible interest rates and loan offers available in the market. You can to almost all the banks and hope to get your loan approval for a mortgage. You might want to have a look at a number of banks before settling for the one that offers the best interest rates and terms, conditions.
You can also get loans from FHA's approved lenders. Their interest rates are low, and you will find it easier to manage their rules and regulations.
With the above-mentioned options, you should be able to get the best possible mortgage offer. However, if you still want to look for other options, you can use your credit card or borrow from a family member or friends.
Home Loans with a credit score of 820
Having a credit score of 820 doesn't mean that you will no longer go through the process of getting a loan.
Some people think that having an excellent credit score of 820 will save them to the long process of getting a home loan. If you are not yet familiar with what the typical process is, then reading the information below will help.
Submitting Documents
Lenders will still require you to submit documents that can verify the income that you are receiving. There should also be information about your debts and assets.
Loan Underwriter
The documents and the loan application will all be submitted to the loan underwriter. The underwriter will be the one to consider factors such as debts, income, credit worthiness, and the size of the loan.
Personal Loans with a credit score of 820
A credit score of 820 means that your bills are paid on time and you have very little debt. It shows a good financial manager who can be trusted with any month of money. Your application for a personal loan is guaranteed to be accepted. Financial institutions will scramble to have you.
Bank loans
You even qualify for a zero-rated (0% interest) loan from your financier. Your loan will be approved very fast and you will enjoy low monthly payments. Be careful not to be taken advantage of.
Online peer to peer lenders
They allow you to get a loan directly from another person (investor). These loan service providers cannot question your ability to pay back your loan. Your loan application can be approved within a matter of minutes.
Loans on collateral
You may decide to go for a secured loan from a bank. Your credit score plays a minimal role on this option. You can walk in and out of bank having secured a personal loan with this option.
Things you can do to improve your credit score of 820
A score of 820 and above means that you have an excellent credit rating. It should not stop you from maintaining or improving it. You should not get too comfortable and take things for granted to a point where you forget your financial obligations. Doing this means that your credit rating my end up being damaged.
Increase your credit limit
This action improves you're the ratio of your credit utilization, which refers to the proportion of the credit limit you use versus what is available. Make a request for credit line increase, but if the lender intends to do a hard pull you can withdraw since it lowers your credit.
Tighten your privacy and security
Fraudsters may open credit accounts in your name without your name. Ensure you read your periodical reports to ensure they don't contain credit you haven't solicited. Don't share too much personal information on social media that fraudsters can take advantage of.
Clear your debts
Ensure that you owe no lender any outstanding amount. Even a $0.1 could have an impact on your credit score since it is still considered debt; worse still, it could be attracting interest. Lenders cannot trust you if you have long-running debts.