What Is A Good Credit Score To Have?
The next logical question to ask is, what a good credit score is to have.
Your credit score is a figure calculated in three digits, which reflects the extent of your creditworthiness. It informs the lenders of the extent to which you are likely to make repayments on any credit that you apply for. A credit score is a numerical representation that indicates someone’s creditworthiness; credit scores start from 300 and go up to 850 with the higher figure denoting the better credit rating. But what is that ‘good’ Credit Score that will enable you to be granted Credit Cards, Loans, and Mortgages among other facilities at the lowest interest rates? Below is a summary of some credit score ranges and what they imply:
800+ Credit Score Range
A credit score that is above 800 is regarded as highly outstanding. Very few people have this credit score range, and it goes a long way to explain why some are denied credit facilities. With a score of 800 or more, you will be able to get the lower interest rates that most lenders and credit card firms offer. It will not be an issue at all to get approved for credit with such a score. It is such 800+ scores that enable individuals to meet the requirements of benefits like the 0 percent introductory APR credit cards. Sustaining such positive financial practice, in the long run, is usually required to achieve such a high credit score.
740-799 Credit Score Range
It is also important to note that anything in the 700s and between 740 and 799 is still considered to be above average. This range stands slightly below the grouping of scores that are above 800, but it will help you secure better interest rates from lenders. The credit score range in this position should not be a hindrance in qualifying for a mortgage loan or a new credit card. Whereas, for auto loan financing, you will again note that the offers will be more strong in comparison to lower credits. The only difference that I have seen is that in the case of a 740 score and an 800 score someone in the lower tier would have to pay a slightly higher interest rate might be 20 basis points on the mortgage. Nevertheless, it is still within the spectrum of credit but is more closely aligned towards the higher end of the scale.
670-739 Credit Score Range
FICO scores ranging from 670 to 739 are considered higher than the average FICO score in America but not as high as the higher tiers. This is still a widely accepted credit score range among lenders as they consider it to be a good credit score. Borrowers within this range can apply for credit cards and other loans easily with reasonable interest rates. It’s typical, and I believe that APR for an average auto loan and mortgage should be available for those with a score of around 700. As for the options at this tier, one thing to note is that the credit card and loan approvals may come with much lower initial credit limits than those offered to consumers with excellent scores of 740 and higher. However, it is advised that you should still be able to get the conventional funding facilities.
580-669 Credit Score Range
When scoring between 580 to 669, the individual or entity is ranked closer or below average compared to the rest of the country. Standard mortgage loans mean that for you to be eligible for the loan, you need to have a score of above 620; therefore, those with a lower score will not have many choices. Those with credit scores below 670 will normally pay more for their loans because their credit score is not as good as that of those with good or excellent credit scores. Hence auto loan interest rates and credit cards may also attract higher charges for those whose score falls within this mid-tier. Raising credit scores to attain a number higher than 670 can help increase access to financing and reduce the costs of fees.
300-579 Credit Score Range
Credit scores below 580 are typically regarded as weak or low credit scores by most lenders. This informs creditors that the borrower is high risk and may default on the payments that are expected of him or her. These low credit scores indicate that the particular has had some problems paying bills, credit, or any kind of funds in the past. Unfortunately, having a bad credit score dramatically reduces the chances of qualifying for credit cards, car loans, mortgages, and other types of loans. In the same regard, even if you apply and get approval for the loan, you will have to pay very high interest rates that are associated with the risk. For instance, getting an auto loan with over 10 percent interest on the principal amount. Scoring above 580 expands the possibilities and beneficial interest rates significantly.
Simple things like having a credit score above 700 count as possessing good credit these days. However, as you now well understand, there is so much tolerance or even preference in the credit scoring system. The credit score that you get determines where you stand within the range; whether it is excellent, good, average, or poor, this is what determines the credit offers and interest rates that the lenders are willing to approve for you. Bettering your credit score brings in added possibilities of more attractive cutthroat probabilities on interest rates on mortgages, prime auto loans, credit limits, and other overall financing.
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