What Is A Good Credit Score Range?
Wondering what’s considered a good credit score – and how to improve yours?
Ever wonder what is a good credit score, and why this little three-digit number is so crucial to your financial well-being? Can it really affect your everyday life? And what kind of control do you have over it? In this guide to credit score ranges, we’ll tackle all of these questions. We’ll take a look at what your credit score means, what’s considered a good score (and what’s a bad one), how your credit score can help or hurt you, how to improve your credit score, and much more.
Credit Score Ranges at a Glance
The two most commonly used credit scores are those issued by Fair Isaac Corp. (FICO) and VantageScore, and each uses a range of 300-850. If you recently got a peek at one of your credit scores, and you’re simply wondering whether it’s a good one or not, here’s a quick look at what’s considered an excellent, good, fair, and poor credit score, according to consumer credit expert John Ulzheimer:
Bad Credit: 300-650
“A score of 650 is generally used as the dividing line between prime and subprime,” Ulzheimer says, referring to the point at which lenders consider you a much greater risk. A score below 650 means you’ll have a harder time qualifying for loans or credit cards, and may have to pay much higher interest rates when you do.
Fair Credit: 651-700
The average American’s FICO score was 695 in 2015, an all-time high. “A score of 700 gets you to about the 50th percentile nationally,” Ulzheimer says.
Good Credit: 701-759
If your credit falls within this range, Ulzheimer says, you’re likely to get approved for whatever you’re applying for. But, he adds, “There’s no guarantee you’re going to get the best deal the lender has to offer.”
Excellent Credit: 760 and above
Ulzheimer says a score of 720 is enough to get the best published interest rates on an auto loan, but the best mortgage rates are only available to people with credit scores above 760. “So, I’d define an ‘excellent’ credit score as one that ensures the best possible deals across all lending environments, which is 760 or above,” Ulzheimer says.
Below, we’ll dig in a little deeper to understand what your credit score means, why you have several of them, how they’re calculated (and by whom), and how to improve a bad credit score.
What Is a Credit Score?
A credit score is a single number that represents how trustworthy you are from the perspective of someone who would lend you money. If you haven’t proven yourself trustworthy, your credit score will be low; on the other hand, if you repeatedly show yourself trustworthy (by paying bills on time, every time), your credit score will be high.
Who determines a credit score?
In the United States, a small number of companies, called “credit reporting agencies,” are in the business of collecting information about your financial behavior. They do this by exchanging information with companies that offer financial items, such as loans, credit cards, and so forth. The agencies generally care about three things:
- the money you’ve borrowed
- the amount you owe
- whether you’ve been making your payments
The agencies collect this information from everyone you’re indebted to and create a picture of how trustworthy you are in terms of credit. In the United States, the three main companies engaged in this business are Experian, Equifax, and TransUnion.
Why Does It Matter If I Have a Good Credit Score?
A good credit score can make your life much, much easier than if you have a bad credit score. You’re probably well aware of some of the reasons, but others may surprise you. When you have a good credit score:
- It’s easier to get a loan
- It can be easier to get (or keep) a job
- Your insurance rates may be lowered
- It can help you launch a small business
- It can help you get an apartment
- It can be easier to get your utilities hooked up
As you can see, good credit is about more than borrowing money — it can help you in deeply personal ways, from easing your apartment hunt to landing your dream job. As if that isn’t enough, 30% of women and 20% of men say they would refuse to marry someone with bad credit — so a good credit score may even help you get hitched.
A Good Credit Score is More than a Number
As I outlined above, a good credit score can have a massive impact on your life, easing the process of borrowing money, finding a place to live, and even landing a job. That’s why it’s essential to not only know what affects your credit, but how to build a good credit score from the get-go or repair a bad one if the need arises.
Once you can confidently say you have a good credit score and know the ins and outs of maintaining good credit, you might want to turn your attention to maximizing the other perks that some credit cards can offer. We offer a general guide to the best credit cards, as well as recommendations for the best rewards credit cards, airline credit cards, cash-back credit cards, and hotel credit cards.
To find out more interesting facts regarding your credit, read the entire article written by Saundra Latham at The Simple Dollar https://www.thesimpledollar.com/what-is-a-good-credit-score/ The Simple Dollar has created an extremely useful guide that includes extensive information on how to build good credit, the meaning of a credit score, and how your credit score affects you in every day life.
Also “How to Build Your Credit When You Have No Credit” by Ben Luthi is another great article about your credit.
Written by Saundra Latham, https://www.thesimpledollar.com/
To learn about Today’s Best credit cards, click the link below!