What is a Good Credit Score
If you’re getting ready to apply for a home or auto loan or even apply for a credit card, you’ll probably be asked for your credit score. Credit scores are essential in helping lending agencies determine whether you are a high or low-risk applicant. Having a good credit score is vital for scoring the best loans with optimal interest rates. Wondering what a good credit score is? Read on for all you need to know.
Credit Score Ranges
Stated by a credit repair Houston expert, credit scores are broken down into a series of ranges. The numbers are determined by several factors, including:
- Payment History
- Credit Utilization Rate
- Total Debt
- Type and Age of Credit Accounts
- New Credit Accounts Opened
- Inquiries for Your Credit Report
When the credit scoring companies compile all the information they have from the above factors, they come up with a number to represent your overall credit health.
All credit scores fall into the following ranges:
- Excellent = 800-850
- Very Good = 740-799
- Good = 670-739
- Fair = 580-669
- Poor – 300-579
What is a Good Score?
As you can see from the scoring ranges above, the higher your number, the better your score. It’s important to keep in mind, however, that a good score is generally considered anything from 700 and higher.
When it comes to loans and interest rates, you can expect a loan application to be approved by most lending agencies with a score that starts at 670. Scores lower than 670 might still be accepted. However, you’ll find that lending agencies tend to be warier and some will deny your application outright.
Here is what you can expect when applying for a loan for each credit score.
Excellent = At this score, you’ll be qualified for the best loans with the lowest interest rates available.
Very Good = You’ll be qualified for loans across the board, and you’ll still be eligible for lower interest rates. You might see a slight increase in interest rates, but you’ll experience no problems obtaining high-quality loans.
Good = When your score hits the “good” range, you’ll still qualify for the majority of loans. Your interest rates will start to increase, however, and you’ll be looking at paying more in total interest over the life of your loan.
Fair = At this point, lending agencies will be concerned about your ability to pay them back. You’ll not only deal with higher interest rates, but you may be denied some types of loans.
Poor = Most people with scores in this range will find themselves unable to access loans at all or, if they do, their interest rates are prohibitively high.
It’s crucial to get your credit score as high as possible when applying for any loan to obtain the best interest rates available.
Your Credit Score is Important
As you can see, ensuring you have a high credit score is vital for obtaining desired loans with the best interest rates. The lower your score, the harder it will be to become approved for loans. Lower scores also mean higher interest rates. How does your score compare?