Lenders may rank your creditworthiness by credit tier if you’re shopping for an auto loan, credit card, or other credit product. But what is Tier 1 credit?

You’ll find below everything you need to know about tier 1 credit, its importance, and how to get there. So read on and learn!

Tier 1 Credit is a credit score some lenders and financial institutions use. It is the highest credit rating a financial service provider can achieve.

This high level of trustworthiness gives access to global capital markets, a great advantage in an ever-competitive market environment.

This type of credit also tends to have lower interest rates, making it an attractive option for those looking for financing.

Those achieving this level enjoy lower loan rates and are usually more likely to be accepted for mortgages, car loans, and other forms of credit.

Achieving Tier 1 Credit requires diligence, planning, and discipline in managing your finances; however, the rewards may be great.

Your credit score is a three-digit number lender use to help determine your creditworthiness.

Tier credit is largely based on credit score, but other financial factors such as income, debt, and assets influence a tier rating.

When referencing a FICO score, scores range from 300 to 850. This scoring model considers scores in the 800 to 850 range exceptional.

A given lender, however, may consider scores in the 750 to 850 range as best and categorize those borrowers as tier 1.

Even though the tier scale is a little mystery, working to improve your credit score is still the best way to reach tier 1.

Even trying to reach tier 1 credit is worth it. Tons of perks come with having an excellent credit score.

If you want the best deal while financing a purchase, you should aim to reach tier 1 credit!

Credit is calculated based on various factors that indicate how reliable a borrower is at repaying loans or credit.

The most common factors used to calculate credit include the following:

This factor looks at whether you have made payments on time in the past. Late payments or missed payments can lower your credit score.

This factor examines how much of your available credit you use.

Using a large percentage of your available credit can lower your credit score.

This factor looks at how long you have been using credit. The longer your credit history, the better your credit score.

This factor looks at the different types of credit you have used, such as credit cards, auto loans, or mortgages.

A diverse mix of credit can help improve your credit score.

This factor looks at how often you have applied for credit recently. Multiple credit inquiries in a short period can lower your credit score.

Getting to tier credit 1 can take a lot of time and effort. Also, it may not be possible for everyone, but trying will only improve your financial life.

Here are some of the things you should do to build an excellent credit score:

this is one of the easiest and most important things you should do to build your credit score.

Even one late payment can be enough to downgrade your credit score, so keep looking closely at your payments!

Having too much debt can be negative for your credit score. This will prevent you from turning to cash advances and loans, which may ruin your credit tier.

Healthy credit usage is a great way to improve your credit score, showing good financial control.

Opening multiple accounts in a short period can hurt your credit score. Limit new credit applications to only those that you need.

Request a free copy of your credit report from each of the three major credit bureaus and review them for errors or inaccuracies.

The age of credit accounts will also impact your credit score.

Those in the top credit tier will have credit accounts that are several years old.

If you’d like to know more about finances and how to improve your financial help, keep reading!

The following article will help you determine the best payment type for your budget!