When you apply for a loan at a car dealership, jewelry store or mortgage company, the banks or creditors look at your credit score, among other pieces of information. Having a credit score that the creditor considers top tier may help you save money in the long run, as you qualify for better interest rates on your loans.
Top Tier
A credit score falls in the range between 300 and 850. The higher your credit score, the better your credit rating. A higher credit score helps an individual qualify for credit more easily or receive credit at a lower interest rate. The credit rating helps lenders assess the amount of risk they take by lending money to a certain person. People who have top tier credit, or who fall into the group of creditors with the highest credit scores, can qualify for the best credit offerings.
Different Lenders
According to the Fair Isaac Corporation, which formulated the FICO credit score used by many lenders, there is no universal credit score that all lenders use as the cutoff for top tier credit. Instead, each creditor uses its own set of criteria to determine what it considers at the time to be a prime credit score. What a lender considers to be a score high enough to qualify for its top tier rates changes over time as the credit market and economy change.
Market Changes
Different lenders have their own standards for what they consider to be top tier credit, based on criteria that changes over time. In other words, a score that was considered top tier credit by a particular creditor may no longer be considered top tier credit by that same creditor just a few years or even months later. Shifts in the credit markets, affected by the economy, also may shift a lender's cutoff for top tier credit. The scores of other credit applicants relative to your own score may also affect whether a lender considers your credit score to be top tier.
Improving Your Score
If your credit score is not helping you qualify for the top credit deals around, engaging in certain activities may nudge your score up high enough to be considered top tier credit. Always make arrangements to pay your current creditors on time, since your creditors may report you as being on time consistently. Keep the balances on your credit cards low and avoid opening more credit accounts than you truly need. Order copies of your credit reports from Experian, Equifax and Transunion, and then look over the reports for any inaccuracies. File disputes with the credit bureaus if you find inaccuracies on your reports.
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