top of page

What is Good Credit?

Updated: Sep 21, 2019

As a highly successful Real Estate Investor for the last seventeen years, Chayo Briggs is the President of Briggs & Lay Pro Incorporated. Besides the multitude of real estate services Briggs is an effective motivational speaker and published author. The key to his success lies in life experience, by developing exceptional skills to create passive income Chayo can assist his clients in procuring their prosperous future; breaking the chains of financial distress.

What does "Good Credit" mean?

As mentioned previously, credit is more than just borrowing money. To a lender like an auto dealer or credit card company, credit is your reputation. Hence, credit resume. How likely you are to repay the funds and fulfill your obligation. If you pay the agreed amount on time every month.

Good credit means you can be trusted to repay the borrowed money. The higher trustworthiness; means added opportunities. It increases the money available. Car loan example; a simple car loan. Say you have excellent credit and you take out a $10,000 loan to buy a new car. The interest rate could be 4.9% with a 60-month (5-year) payoff. This means you pay $188 each month, or $11,295 at the end of the five years.However, if you have no credit or bad credit and want to finance the same car, the results are very different. Because of your credit history, or lack thereof, you will end up paying additional cost overall. For example, if you receive an interest rate of 9.5% (or maybe even higher!), over 60 months you would pay $210 each month, or $12,601 in total. That’s $1,300 more than if you had applied with good credit.

*The example above illustrates how credit history can affect you and should not be used as a guarantee for interest rates. *

The lesson is clear: Good credit saves you money! It is typically true whether you’re looking at car loans, a home mortgage, credit cards, or any of the types of credit.Also, many employers look at credit history to evaluate potential employees. Your credit history may indicate the ability to fulfill your agreements, background with finances, ability to handle multiple obligations or various other factors. While employers never use credit history as the only basis for hiring, it’s becoming an increasing factor to compare or evaluate candidates.

All-in-all, your credit history provides a glimpse of your character, your reliability, and your trustworthiness. Start building your financial reputation, today.

Consumers apply for credit when your income or bank account cannot afford to pay cash for various goods and services. Credit is issued from a grantor, whom you agree to repay in a timely fashion. The finance charges and time limit are decided at the point credit is granted. Four types of credit;

Revolving credit: Consumers are given a maximum credit limit, you can use to make purchases up to that limit. Each month, the balance (or revolve the debt) is paid back with nominal payments. Most credit cards are a form of revolving credit.

Charge cards: When someone is issued a charge card the process works in the same fashion as a revolving card, but the balance must be paid in full every month.

Service credit: Consumer agreements with service providers are all credit arrangements. You receive electricity, cellular phone service, gym membership, etc., with the agreement that you will pay for them each month. Not all service accounts are reported in your credit history.

Installment credit: A creditor loans you a specific amount of money. The borrower agrees to repay the money and interest in regular installments of a fixed amount over a set period of time. Car loans and mortgages are two examples of installment credit. Credit scores are used by lenders, including banks providing mortgage loans, credit card companies, and even car dealerships financing auto purchases, to make decisions about whether to offer your credit (such as a credit card or loan) and what the terms of the offer (such as the interest rate or down payment). There are many different types of credit scores. FICO® Scores and scores by VantageScore are two of the most common, but industry-specific scores also exist.

Scores are normally between 300-850, a credit score of 700 or above is generally considered good. A score of 800 or above on the same range is excellent. Most credit scores fall between 600 and 750. Higher scores represent better credit decisions and can make creditors more confident that you will repay your future debts as agreed. Credit scores matter to lenders because they give a quick estimate for the risk of a given loan. People with good credit scores are more likely to repay their obligations than those with bad ones. For this same reason, lenders will make loans to people with lower credit scores more expensive. Since the financial institution is taking on a greater risk by extending a loan to such an individual, they need to be compensated appropriately. One initial step toward fixing your credit score is correcting any errors right away. Five percent of consumers had an error on their report from three credit bureaus. These errors can include anything from account mistakes with the same name, to identity theft, or closed accounts still report open. Request free copies of your complete report from the three major credit bureaus on the federally authorized site annual credit report.

Review them carefully, looking for items that aren’t yours, balances that have been paid, items that have been reported multiple times, and other mistakes. Dispute any mistakes that you find. While this isn’t most people’s idea of a fun afternoon, it is something you should do quarterly.

18 views0 comments

Recent Posts

See All


bottom of page