Whats a Good Credit Score?
Whats a Good Credit Score?
Your credit score is a number from 300 to 850 and is made up of a variety of different factors that lead to the final number. So, how do you know what’s a good credit score? Or, more importantly, what’s a good enough credit score to accomplish whatever it is you are looking to do?
First let’s clarify. When you ask, “whats a good credit score?” in the United States, you are referring to a FICO score which is the best-know and most widely used credit scoring model based on information found in your credit files based on your personal financial history.
The exact formulas for calculating credit scores are secret, but includes (in decreasing order of importance) your payment history, current credit utilization, length of your credit history, types of credit used, and recent searches for credit. There are also other special considerations which can impact your credit score.
According to FICO the median credit score is 723. Median is not the same as average and the average is not disclosed. Instead, the median simply means that if you have a 723 credit score then there are just as many people who have a higher score as have a lower score.
Besides the magic 723 number there are a number of different classifications in what is viewed as a good credit score. The ultimate authority is, of course, the credit or lending institution you are working with. They will set their own rules as to what your credit score requirements must be in order for you to take advantage of their services.
OK, the Numbers: What’s a Good Credit Score?
As a guideline, you can consider that any score of 760 or higher is an excellent credit score and you’re likely to get the best lending rates. Scores of 700 to 759 are still considered very good.
The range of points that truly answers the question of “what’s a good credit score” varies a bit. I have seen “good” cut off at 680 or just about any point as low as 650. To still give you a good shot at a loan, then, let’s define a good credit score as anything at or above 680 as that seems to fit all models.
Scores down to 620 are still considered OK for many applications. Below this number, down to 580, is considered rather poor. And anything below 550 is very poor. At these low levels it is doubtful you’d qualify for any loan, but if you do, you’d pay very high interest rates to compensate the lender for their increased risk.
So, did this answer your question? Whats a good credit score? It seems for most applications you should try to have a score of 680 or higher. Please review the resources on this site to help you learn more about your credit score and, if needed, how to improve it.
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