What is Considered a Good Credit Score?
By Curtis G Martin
A 700 or higher credit score usually deemed good. An excellent credit score is 800 or above in that same range. Most credit scores are within the 600 and 750 range.
Moneylenders often utilize credit scores. These moneylenders include banks granting mortgage loans, credit card companies. And even car dealerships funding auto purchases, to make choices about whether or not to extend you credit. (like a credit card or loan) And what the duration of the offer (such as the interest rate or down payment) will be. There are various models of credit scores. You have FICO® Scores* and also scores by VantageScore these are two of the most popular types of credit scores, but industry-specific scores utilized as well.
What's a Good FICO® Score?
Example of the most famously known credit score created by the Fair Isaac Corporation is FICO® Scores. FICO® Scores are utilized by various lenders and frequently range from 300 to 850. Regularly, a FICO® Score higher 670 is considered a good credit score by these standards, and an 800 or higher rating is usually recognized to be outstanding.
What's a Good VantageScore?
Scores by VantageScore are also types of credit scores that are generally utilized by lenders. The VantageScore produced by the three major credit bureaus, including Experian, Equifax, and TransUnion. The most developed VantageScore 3.0 design uses a range between 300 and 850. A VantageScore beyond 700 is ordinarily considered to be good, while above 750 is considered to be excellent.
Why Credit Scores MatterCredit scores are decision-making tools that lenders use to help them anticipate how likely you are to repay your loan on time. Credit scores are also seldom described as risk scores because they help lenders assess the risk that you won't be able to repay the debt as agreed.
Having good credit is necessary because it decides whether you'll qualify for a loan. And, depending on the interest rate of the loan you are eligible for, it could mean the difference between hundreds and even thousands of dollars in savings. A good credit score could also mean that you can rent the apartment you want, or even get cell phone service that you need.
Think of your credit scores like a report card that you might review at the end of a school term, but instead of letter grades, your activity ends up within a scoring range. However, unlike academic grades, credit scores aren't stored as part of your credit history. Instead, your score's generated each time a lender requests it, according to the credit scoring model of their choice.
Every time you set a primary financial goal, like becoming a homeowner or getting a new car, your credit is likely to be a part of that financing picture. Your credit scores will help lenders determine whether or not you qualify for a loan and how good the terms of the loan will be.
However, credit scores are usually not the only things lenders will look at when deciding to extend you credit or offer you a loan. Your credit report also contains details taken into consideration. Your total debt amount, the credit mix, length of time you have had credit accounts and any derogatory marks you may have. Other than your credit history and scores, lenders may consider your expense total measured against your monthly income. Known as your debt-to-income ratio, depending on the type of loan you're seeking.