Credit Criteria for Amazing Loans

A strong credit report and FICO score (the three-digit number from 300 to 850) can improve your financial leverage and afford you the best rates and terms on car loans, mortgage loans and credit cards. An excellent credit score can even qualify you for some of the best privileges afforded to credit-card holders. Strong credit takes work, diligence and maintenance.

FICO Score

The FICO score (Fair Isaac Corporation) is a three-digit number that gives an estimation of your creditworthiness on a sliding scale. In general, a score above 720 is excellent, while a score below 600 is poor. People with scores above 750 are guaranteed the market rate on nearly all loans as long as their income supports their application.

Depth of Accounts

Great credit requires a solid track record of responsibility. Customers who have 10 or more years of on-time payment history for all open and closed accounts will likely have great credit. Essentially, a customer who has had two car payments in 10 years paid perfectly, three perfectly paid open credit cards for 10 years and a mortgage that was opened 15 years ago (with perfect payment history, of course) will have the best possible credit score.

Number of Accounts

The trend in America is to run up debt on credit cards. Some consumers are saddled not only by extreme debt but also by extreme debt spread out over seven or eight or even 10 cards. Those with excellent credit will have one or two credit cards with low balances, one mortgage and one car loan. An inordinate number of revolving debts especially will weaken your score.

Reasonable Use

Customers who qualify for amazing loans are not carrying too much debt. For example, a customer with excellent credit (say, a 760 FICO score) will likely have two credit cards with a total of $20,000 in available credit. However, that customer will likely have less than $500 in balances on both cards. Keeping use low on high-limit credit cards improves your score.

Red Flags

Red flags--such as judgments, charge-offs, collection accounts and tax liens--are nowhere to be found on the credit reports of those with excellent credit. Customers with high credit scores not only make sure to pay on time and keep their debts low, but they also monitor their reports to protect themselves against such red flags and fraudulent activity.