Good Credit

AAA

DEFINITION of 'Good Credit'

A qualification of an individual's credit history that indicates that the borrower is a safe credit risk. A high credit score is an indicator of good credit, while a low credit score indicates bad credit. An individual's credit history is dependent on a number of factors, including the amount borrowed, the amount of available credit remaining and the timeliness of payments.

INVESTOPEDIA EXPLAINS 'Good Credit'

Credit rating agencies assign a score to an individual's credit rating, but this number may vary according to the methodologies used in calculating the credit score. Having good credit makes it easier to obtain loans, such as mortgages, and allows the borrower to obtain a more favorable interest rate. The most commonly used credit score is the FICO Score.

RELATED TERMS
  1. Credit Rating

    An assessment of the credit worthiness of a borrower in general ...
  2. Credit Report

    A detailed report of an individual's credit history prepared ...
  3. FICO Score

    A type of credit score that makes up a substantial portion of ...
  4. Credit Risk

    The risk of loss of principal or loss of a financial reward stemming ...
  5. Credit Freeze

    A credit freeze, also called “security freeze,” is a freeze on ...
  6. Soft Inquiry

    A credit report check that does not affect an individual's credit ...
RELATED FAQS
  1. What do creditors have to report to credit bureaus?

    Creditors are not required by law to report anything to credit bureaus, although many businesses choose to report on-time ... Read Full Answer >>
  2. How do I get a higher limit on my credit cards?

    Before applying for a higher credit limit, it is important to demonstrate responsibility. One way to do this is by making ... Read Full Answer >>
  3. Why do banks use the Five Cs of Credit to determine a borrower's credit worthiness?

    Banks use rigorous policies and analyses when determining if and how much money to lend to clients. The methods used by banks ... Read Full Answer >>
  4. Does shopping for the best interest rate affect my credit score?

    Shopping for interest rates does not necessarily affect a person's credit score. When a borrower submits an application to ... Read Full Answer >>
  5. Do all banks use the Five Cs of Credit when evaluating potential borrowers?

    Both individual and business borrowers are asked to provide information related to their credit history, income and debt ... Read Full Answer >>
  6. How does your checking account affect your credit score?

    Your credit report provides a snapshot for prospective lenders, landlords and employers of how you handle credit. For any ... Read Full Answer >>
Related Articles
  1. Professionals

    Why Bad Credit Is Bad For Financial Careers

    In order to obtain and maintain a career in the financial industry, it is also important to have a clean credit report.
  2. Credit & Loans

    How Credit Cards Affect Your Credit Rating

    The average American household has four cards, but does that mean more is better?
  3. Mutual Funds & ETFs

    Investing In Credit Card Companies

    This investment requires keeping an eye on consumer indexes and the overall health of the economy.
  4. Options & Futures

    How To Establish A Credit History

    Can't get a credit card without a credit history, and can't get a history without a card? Break the Catch-22.
  5. Credit & Loans

    Digging Out Of Personal Debt

    Find out why good intentions can put consumers in an even bigger hole than before.
  6. Credit & Loans

    How To Increase Your Appeal To Prospective Lenders

    Making a business eligible for loans/credit cards at the best possible rates requires crafting an excellent credit profile through the smart use of credit.
  7. Credit & Loans

    What's a Revolving Line of Credit?

    A revolving line of credit is an arrangement made between a company or an individual and a bank to borrow money on a short-term basis.
  8. Credit & Loans

    Top Credit Cards For The Ultra Rich

    Only a few people qualify for these elite cards. The question is, are the lush perks big bucks can buy you worth the cost?
  9. Credit & Loans

    Is My Credit Score Useful Outside The U.S?

    If you're hoping that your credit score will follow you overseas – or worried that it will– here's a quick primer on how your score will add up abroad.
  10. Credit & Loans

    Is It Worth Paying To Check Your Credit Score?

    Generally, a free credit report is all you need. If you've had some credit issues, it may be worth buying your credit score to get a finer level of detail.

You May Also Like

Hot Definitions
  1. Geometric Mean

    The average of a set of products, the calculation of which is commonly used to determine the performance results of an investment ...
  2. Fisher Effect

    An economic theory proposed by economist Irving Fisher that describes the relationship between inflation and both real and ...
  3. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  4. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  5. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  6. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
Trading Center