Do You Have a Good Credit Score?

Having a good credit score is no doubt the issue that all of us may have concerned at one time or another when applying for a loan or getting denied credit. As lenders use your credit score for approving your credit application, improving your credit score long before you apply for a loan is a must.

As you may already know, your credit score will tell lenders how likely you are going to pay your bills. The better your score, the higher your chance you have of getting approved for a loan and the lower interest rates the lender is willing to offer. Whereas, the lower your score, the more likely you won’t get approved for a loan.

FICO Credit Score Range

The industry standard of credit scoring system that represents the level of credit worthiness of consumer is the FICO score. The FICO score, developed by Fair Isaac Corp., has a credit score range of 300-850. This is also the same credit score range used by credit bureaus, which have their own unique systems of compiling scores.

According to a report made by Fair Isaac Corp., majority of people in the U.S. have scores between 600 and 800, with the median (half of scores above and below) is 723. A score that is 720 or higher is considered a good score and below 600 is considered a poor rating. The following are details of credit score ranges:

Good Credit Score

If you have a 700 credit score or higher, that means you have very good to excellent credit. For some lenders, the best credit score ranges are from 720 and above -- the lenders will probably offer you the best rate. But if you have a credit score between 680 and 699, that still means good and you can get a loan with normal rates.
Average Credit Score

A credit score range of 620 to 679 is average and majority of people in the United States have scores along that range. It means you won’t get denied but the terms are not going to be that generous either.
Low Credit Score

A credit score range of 580 to 619 is considered low credit score, but it does not mean that you can't get any credit. In fact, banks and brokers would be all too willing to lend you money but on their terms. This means that you can get a loan but the interest rates are probably going to be very high.

At this kind of credit score range, the lender has the advantage and you are practically under their mercy. But the good news is that your score is not so low that it would be impossible to move it to good credit level. Through simple credit improvement tips, you can change low credit to good credit.
Bad Credit Score

This is where the trouble starts. Your credit is bad. You will still get a loan but at sub-prime rates and you won’t like the terms. Still, you probably should take it anyway because a new loan could offer you a fresh new start to building your credit.

The Importance of Having a Good Credit Score

Understanding the ranges of good credit scores come in handy whenever you are faced with inconsistent or low credit scores. However, this does not mean that if you are scoring below 720 have no chance of getting credit. The fact is lenders may still approve credits even if you have low credit scores.

Even people with bad credit can get approved for a loan just as people with nearly perfect scores can get denied. The credit score range reflects only the likelihood of whether you're going to be approved or not. There are many factors involved in a loan approval and your credit score is only one of them.

Want to get a loan? Get your credit report long before you apply for the loan to get an idea of what interest rate to expect and to dispute any errors on your report. If your score is not too low it might take less than 12 months to be in a good credit score range, and have a chance to get a lower interest rate.

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