Monday, June 5, 2023

What Are Credit Scores Ranges

What Are Different Credit Score Ranges

Credit Score Scale Range Explained – How Does It Work?

Banks Editorial Team

Banks Editorial Team

Your is a three-digit number ranging between 300 and 850, which provides an insight into how you manage debt obligations. Those who have higher credit scores are seen as less likely to fall behind on debt payments. However, if your credit score is on the lower end, youll be perceived as risky in the eyes of lenders, and your borrowing costs could be higher.

Not all lenders and creditors will see identical scores when checking your credit, as there are various credit-scoring models. Stick around to learn more about why credit scores differ, how scoring models work and ways to improve your overall credit health.

What An Excellent/exceptional Credit Score Means For You:

Borrowers with exceptional credit are likely to gain approval for almost any credit card. People with excellent/exceptional credit scores are typically offered lower interest rates. Similar to “exceptional/excellent” a “very good” credit score could earn you similar interest rates and easy approvals on most kinds of credit cards.

What Are Fico Credit Score Ranges

FICO® Scores are calculated with algorithms created by Fair Isaac Corp., which is why theyre called FICO® Credit Scores1. FICO® Scores generally range from 300 to 850.

There are five levels of ranges on the FICO® Score scale.

  • Exceptional: A score of 800 or above puts you in the highest FICO® Credit Score range. Falling anywhere in the exceptional range means you should qualify for most credit card offers as long as you meet other application requirements.
  • Very Good: The very good range usually means you have a credit score of 744 799. People in this range are considered dependable borrowers.
  • Good: If your score is between 670-739, youll fall into the good range. This means youre considered dependable, but you may have had a late payment in the past, carry higher debt levels or you may not have a long credit history.
  • Fair: A credit score of 580 669 means youre in the fair range. You likely made a payment that was 30 days late or more, carry a high debt load and this means you wont be eligible for the best interest rates.
  • Poor: When you have defaulted on loans or frequently pay your bills more than a month late, your credit score is likely to be poor, and you may not qualify for a credit card or loan if you apply.

Also Check: Why Credit Score Went Down

How To Improve Your Credit Scores

To improve your credit scores, focus on the underlying factors that affect your scores. At a high level, the basic steps you need to take are fairly straightforward:

  • Make at least your minimum payment and make all debt payments on time. Even a single late payment can hurt your credit scores and it’ll stay on your credit report for up to seven years. If you think you may miss a payment, reach out to your creditors as quickly as possible to see if they can work with you or offer hardship options.
  • Keep your credit card balances low. Your is an important scoring factor that compares the current balance and credit limit of revolving accounts such as credit cards. Having a low credit utilization rate can help your credit scores. Those with excellent credit scores tend to have an overall utilization rate in the single digits.
  • Open accounts that will be reported to the credit bureaus. If you have few credit accounts, make sure those you do open will be added to your credit report. These could be installment accounts, such as student, auto, home or personal loans, or revolving accounts, such as credit cards and lines of credit.
  • Only apply for credit when you need it. Applying for a new account can lead to a hard inquiry, which may hurt your credit scores a little. The impact is often minimal, but applying for many different types of loans or credit cards during a short period could lead to a larger score drop.

What Is A Good Credit Score According To Lenders

Credit Score Chart Transunion ~ news word

Lenders, such as credit card issuers and mortgage providers, may set their own standards on what “good credit” means as they decide whether to grant you credit and at what interest rate.

In practice, though, a good credit score is the one that helps you get what you need or want, whether that’s access to new credit in a pinch or lower mortgage rates.

Read Also: Do Closed Accounts Affect Your Credit Score

What Is A Fair Credit Score

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On commonly used credit score scales, fair credit starts around 630. Most FICO scores use a 300-850 point range, as does FICOs competitor, VantageScore.

While its tempting to hope a particular number will tell you if you’ll qualify for a loan or credit card, the reality is that lenders and card issuers set their own standards for scores required for approval.

That said, knowing what you are in can give you a good idea of what credit products youre likely to qualify for, and better credit will get you better terms.

Length Of Credit History

The length of your credit history impacts your score slightly. A couple of things affect this.

One is how long youve had access to credit. The longer its been since youve established your first loan or credit card, the longer its been since you got your most recent loan, and the older your average credit card or loan is, the better it is for your score.

The FICO Scoring model also looks at how long its been since youve used some of your loan accounts. Generally, it helps your score if you only borrow money when you need to.

Read Also: Ways To Check Credit Score

Exceptional Credit Score: 800 To 850

Consumers with a credit score in the range of 740 to 850 are considered consistently responsible when it comes to managing their borrowing and are prime candidates to qualify for the lowest interest rates. However, the best scores are in the range of 800 to 850.

People with this score have a long history of no late payments, as well as low balances on credit cards. Consumers with excellent credit scores may receive lower interest rates on mortgages, credit cards, loans, and lines of credit, because they are deemed to be at low risk for defaulting on their agreements. Having an excellent credit score is particularly useful for qualifying for a personal loan, as it typically more than makes up for a lack of collateral.

Excellent Credit Score Range

Understanding Your Credit Pt. 3 – Credit Score Ranges – A Spin on Spending

No matter which scale is used, those whose scores are in the highest range are considered to have excellent credit and present the lowest credit risk. An excellent credit score not only almost guarantees appproval when applying for most types of credit, including nearly any of the top credit cards that catch your fancy, but also ensures the absolute best interest rates and the lowest fees.

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Very Good Credit Score: 740 To 799

A credit score between 740 and 799 indicates a consumer is generally financially responsible when it comes to money and credit management. Most of their payments, including loans, credit cards, utilities, and rental payments, are made on time. are relatively low compared with their credit account limits.

Will You Start Out With A Credit Score Of 300

Even if you are just starting your credit journey, or have just got your first credit card, it is unlikely that your credit score will be as low as 300, unless you start off with high debt and poor credit habits. However, as you have yet to build your credit history, it will still be fairly low.

Even if you are just starting your credit journey, or have just got your first credit card, it is unlikely that your credit score will be as low as 300, unless you start off with high debt and poor credit habits. However, as you have yet to build your credit history, it will still be fairly low.

Read Also: What Is The Good Credit Score

What Is A Tier 4 Credit Score

Asked by: Adolfo Jacobson

Tier 4: A good credit score ranges between 650 to 669 and means you’re responsible with my credit and usually make my payments on time. Tier 5: A fair credit score ranges from 630 to 649 and means you try to be responsible with my credit but have had some recent credit challenges.

What Is Your Credit Score

FICO credit score rating scale

The most common credit score range is 300 to 850. In other words, 850 is the best credit score you can have, while 300 is the worst. And a good credit score is anything from 700 to 749. All of the most popular credit-scoring models, including those from VantageScore and FICO, now use that 300-to-850 credit score scale. Thats good because knowing the possibilities for what a credit score could be is the first step toward truly understanding what your credit score means.

To help you better understand the significance of your score, whichever it happens to be, WalletHub analyzed every single credit score from 300 to 850. Below, you can take a closer look at the different tiers in the credit score range, learn everything you need to know about your particular score, and see what steps you can take to improve.

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What Are The Credit Score Ranges For 2021

Each of the three major credit bureaus evaluates credit scores differently, with each score falling into a specific range. However, the most commonly used basis for these credit scores was created by FICO. The FICO credit score ranges vary from poor to excellent, with specific factors affecting the score you receive. The better you manage specific areas of your finances, the more likely your score will be to improve. Having a good credit score will raise your chances of receiving low interest rates on credit cards and loans.

No matter your credit score, a financial advisor can help you plan for the future. Talk to a local financial advisor today.

Average Fico Score Increases For Fourth Consecutive Year Despite Pandemic

Average FICO® Scores increased for the fourth consecutive year in 2021. While not as large as last year’s eight-point increase, this year’s four-point increase was enough to pull even more U.S. consumers into the “good” credit score range. In fact, 71% percent of Americans had a credit score of 670 or greater in 2021, versus 69% in 2020.

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Make Your Payments On Time

Making payments on time is a must if you want to raise your credit score. History of payments makes up 35% of a borrowers credit score, which makes it the most influential factor that contributes to credit. To make sure you are making payments on time, set up reminders in your phone or on your calendar. You can also sign up for autopay to ensure you are making on-time payments each month.

What Is An Excellent Credit Score Range

Credit Score Range (300-850) Explained

Excellent credit score = 740 850: Anything in the mid 700s and higher is considered excellent credit and will be greeted by easy credit approvals and the very best interest rates.Consumers with excellent credit scores have a delinquency rate of approximately 2%.

In this high-end of credit scoring, extra points dont improve your loan terms much. Most lenders would consider a credit score of 760 the same as 800. However, having a higher score can serve as a buffer if negative occurrences in your report. For example, if you max out a credit card , the resulting damage wont push you down into a lower tier.

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The Vantagescore Credit Score Model

While FICO may be the mortgage-industry standard, the VantageScore credit score model is actually used fairly widely. In fact, according to VantageScores website, approximately 12.3 billion VantageScore credit scores were used by more than 2,500 users between July 1, 2018 and June 30, 2019. Additionally, many free credit score sources use the VantageScore credit score.

Watch on

As with the FICO credit score model, the VantageScore model has had several variations over its lifetime. The current model, VantageScore 4.0, was released in 2017 and changed the scoring structure to include trended data, which reflects patterns in borrower behavior, among other things.

Unlike FICO, the VantageScore models ignore paid collection accounts. It also puts less emphasis on unpaid medical debt compared with other types of collection accounts.

For the older VantageScore 1.0 and 2.0 models, the credit score scale ran from 501 to 990. The VantageScore 4.0 scale is the same as the FICO Score 8 scale, going from 300 to 850. As with the FICO scales, a higher number indicates lower credit risk.

Understanding Credit Score Ranges Is Really Important

Knowing where you fall on a credit score range can be immensely helpful because it can give you an idea of whether youll qualify for a new loan or credit card. Your credit scores can also help determine the interest rates youre offered higher rates could add up to lots of money over time.

Lets take a deeper look at the different credit score ranges and what they can mean for you.

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What A Fair Credit Score Means For You:

Borrowers within the “fair” credit score may push interest rates higher for their lines of credit. Borrowers in this range may incur higher charges associated with a loan or line of credit. It may be difficult to obtain a 30-year mortgage at the lower end of this range and you may expect higher interest rates. Auto loan APRs may have higher rates and credit cards may have lower limits and higher APRs.

Key Points About: Credit Score Ranges

Credit Score Range from 300 to 850
  • Exceptional credit scores can mean a person qualifies for most credit card offers, depending on other elements of the application.

  • Very good and good credit score ranges tell credit issuers that a credit user usually pays back debts dependably.

  • Fair credit score ranges indicate to credit issuers that a credit user may hold high amounts of debt.

  • Your credit score is a three-digit number that has a strong influence on your financial life. It can influence how much interest youll have to pay on loans and , or whether youll be able to get them at all. It could also influence the kind of home or car youll be able to buy.

    Read Also: Credit Score For Home Equity Loan

    Whats A Utilization Ratio Or Debt

    According to Equifax, your debt-to-credit ratio, also known as your utilization ratio, is the amount of your debt compared to your credit limit.5 Your debt-to-credit ratio is important because if your ratio is high, it can indicate that youre a higher-risk borrower.5 Thats because lenders see borrowers who use a lot of their available credit as a greater risk.5

    For example, imagine you have a couple of credit cards and a line of credit with a total debt of $14,000 and a combined limit of $20,000. Your debt-to-credit ratio would be 70%.

    According to the Government of Canada, a ratio of 35% or below on credit cards, loans and lines of credit is recommended.3

    Can You Have No Credit Score

    If you have never used a credit card, or you have never taken out a loan, you will not have a credit history. This is because most credit scoring models use information from credit cards and loans to determine your score. Thus, if this information is not there, they can’t generate a score.

    If you have never used a credit card, or you have never taken out a loan, you will not have a credit history. This is because most credit scoring models use information from credit cards and loans to determine your score. Thus, if this information is not there, they can’t generate a score.

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    When A Few Points Can Make A Big Difference

    Depending on the type of loan, borrowers might have to meet certain thresholds to qualify.

    For example, to qualify for an FHA-insured mortgage loan, borrowers must meet a certain credit score rating or else the lender cant make the loan. So if the threshold to qualify for financing is 500, a borrower with a credit score of 499 will be denied.

    Additionally, the interest rate a lender offers you can also be determined by a few points on your credit score. Lenders use risk-based pricing, which means that a borrower who presents a higher risk wont get as good of an interest rate than someone who has excellent credit.

    If you dont meet the lenders credit score threshold for its very best pricing, youll likely pay hundreds or thousands of dollars more in interest than someone who does qualify for the best rates.

    Improving Your Credit Score


    For many, the sheer number of credit scores floating around makes it difficult to determine the condition of their credit. At the end of the day, it doesnt really matter which model is used to calculate your score. Just keep in mind that higher numbers are better and that the key to healthy credit is to maintain healthy financial habits.

    Always paying bills by the due date, keeping credit utilization rates low, and avoiding opening unnecessary credit accounts are all good ways to maintain a good or better credit rating.

    In the event that your score falls into the fair category or below, the first step to improving your credit will be to get a copy of your credit report from each bureau to determine which accounts are bringing your score down. Once youve identified the sources of the problem, you can begin to improve your credit behavior.

    Be sure to address any mistakes or discrepancies on your report, as well, to make sure your score accurately reflects your actual credit history. You may also want to think about using the services of a reputable credit repair company to look for disputable items that may be negatively affecting your score.

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