With 56% of Americans having poor or bad credit, good credit can be hard to come by… But what is a good credit score exactly? Different lenders may have different definitions of what a “good” credit score is. One lender may approve clients with a 640 credit score or higher while another might approve clients at 720. The higher your credit score is, the more likely you are to get approved and the better your rate will be.
FICO score is the most commonly used credit scoring model. FICO scores ranges from 300-850 and can differ depending on what credit application you’re pulling for. If you are applying for a mortgage your score will be different than applying for a new car, and both of those scores will be different than a score applying for a credit card, and so on. Here is the considered scoring range for FICO scores:
FICO Scoring Model:
- Excellent Credit: 781-850
- Good Credit: 661-780
- Fair Credit: 601-60
- Poor Credit: 501-600
- Bad Credit: Below 500
Why it’s Important to Have a Good Credit Score
While you may be able to get approved from some lenders with a 640, you’ll be missing out on premium rates which can mean you’ll be paying more money in the long run. Someone with a 780 may wind up paying close to $100,000 less on a mortgage compared to someone in the mid 600s. Good credit will also allow you to get better credit cards with lower interest rates as well. It’s no joke, people with bad credit will always wind up paying more. Read our blog on how bad credit will control your life for a better understanding of this.
What is your Credit Score?
Don’t just assume you have good credit. If you plan on applying for a loan in the not too distant future, you may want to figure out where your scores are at right now. Find out your scores and make sure there are no errors reporting on them. Fill out the form below and Better Qualified will give you a free credit consultation with a credit analyst.