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You've probably heard such description of borrowers as prime and subprime. Borrowers with strong credit scores may be offered prime credit options, while borrowers with bad credit may only qualify for subprime credit offers. But what exactly do these terms mean?
Subprime includes bad, fair, and poor credit. Prime covers good and excellent credit. Thus, a prime credit score falls within the range from 660 to 719 (according to the Consumer Financial Protection Bureau research). However, lenders and credit card issuers may have their own classification, which can vary slightly. A rule of thumb is that when you have a good credit, you are considered a prime borrower.
Consumers with credit scores below 660 are considered subprime borrowers. And individuals with super-prime scores have credit scores of 720 and above.
When you have prime credit, you are more likely to receive better credit offers, higher credit limits, lower interest rates, better rewards and benefits, and lower fees. That's because prime borrowers are considered by lenders to be more creditworthy and able to repay debt.
If you want to get a prime credit score, you can start with evaluating your current financial standing and credit scores. Then you can follow these tips to achieve a prime credit score:
- Regularly check your credit scores: it's important to monitor your credit when you are improving or maintaining your credit. It can help you spot errors, fraudulent activity, or sudden dips in your credit scores.
- Dispute errors on your credit reports: any error you notice on your credit reports can be disputed with the appropriate credit bureau or lender. If you don't do it, errors will be lingering on your reports for several years negatively impacting your credit scores.
- Pay your bills on time: payment history is extremely important when it comes to credit scores. When you make a late payment, it can lower your credit scores. If you continue being late, it will have a more negative impact on your scores, and you may even ruin your credit history
- Keep balances low: if the amount of credit you're using is bigger compared to the amount of available credit, your credit utilization will be high, which can negatively impact your credit score. Try to keep your credit utilization below 30% overall and with each of your credit card accounts.
- Avoid opening too many new accounts: opening multiple new accounts in a short period of time may negatively impact your credit score. It would be wiser to space out applications and apply for new credit only when you really need it.
