Credit reporting agencies use your past tendencies to predict your ability to make debt payments in the future. This is what makes up your credit score. However, it can be challenging to understand exactly what credit score range your score falls into. Here we’ll cover credit score ranges, which are desirable, and how they can impact your life.
What is a Credit Score Range?
The range of a credit score can tell you whether you have good credit or bad credit. The higher your credit score, the better your credit is. Better credit makes it easier to obtain credit cards and loans.
Sometimes having a good credit score isn’t enough. There are many different credit scores, and they all have different ranges. The FICO score range and VantageScore ranges are diverse because they use different formulas and prioritize various aspects of your credit history.
There are other credit scores, but FICO and VantageScores are used most often. Even though many other companies calculate credit scores, we’ll focus on these two.
Understanding how credit scores work can help you improve your credit in the long run. Plus, it makes it easier for you to predict whether you’ll qualify for a new loan or credit card.
What is a Good Credit Score?
A good credit score typically falls in the range of 650–719. Different definitions of a “good” credit score range vary based on who calculated the score. In the above graph, you can see where your score falls.
There are different ranges for each type of credit score. To make things easier, this article groups these credit ranges together to help you guess where you fall within these ranges. For now, it’s easier to have an understanding of the scale and what makes a credit score poor, good or excellent.
Poor Credit Range (300–629)
For the most part, a poor credit score falls between 300 and 600. Depending on the model you look at, a poor credit score can be as low as 250. No matter where you land in this range, your credit is poor, and lenders are not likely to approve your applications. If your application does get approved, you’ll likely have to pay more fees and higher interest rates.
If you have low credit and want to improve your score, getting a credit card can help. A lot of times, if you’ve never had credit, your credit score will be low. If you can’t get approved for a regular credit card, try getting a secured card instead. These types of accounts can help you build credit and are usually easier to get approved for.
Good Credit Range (650–719)
Consumers in the good credit range usually fall in the mid-600s to the low-700s range. The benefits of having a good credit score are that you have an easier time being approved for loans and often get better interest rates. These scores won’t get you the very best interest rates, but you’re less likely to pay high fees and interest rates.
Most people fall under the fair to good credit range. Many people strive to reach the excellent credit range but find themselves forever stuck in the mid-700s. This is okay, as a good credit score is still good. You’ll be able to apply for loans and get new credit cards that can help you build your score so that it gets to the excellent range.
Excellent Credit Range (720–850)
An excellent credit score is usually anything above the mid-700s. People with an excellent credit score are most likely to obtain credit with the lowest interest rates. Getting into the excellent range usually takes time. People with a credit score in the 800s tend to have a lengthy credit history and pay all their bills on time.
Understanding Your Credit Range
Understanding which range you fall in can be very beneficial. It can help you make strategic choices when applying for credit and what you should apply for. If you have a poor credit score, you might want to wait to apply for a loan or high-reward credit card because you have a very high chance of being denied. Understanding where you fall can also help you set goals to improve your credit score.
Different Credit Scores
Because there are many different credit scores, it may be challenging to understand what range you fall in. You may have looked at your VantageScore, only to find out that your lender is using your FICO score, which can be very different. Many lenders also create their credit score scale that may have a different definition of fair, poor, good, or excellent.
Lenders may choose to use their credit ranges to help decide whether or not a person meets their specific guidelines. Each lender has its requirements.
You may also find that your scores can vary as much as 100 points from one credit scoring agency to another. Regardless of what credit score you’re looking at, remember that the higher your credit score, the better off you are.
If you regularly monitor your credit score, you may see that it changes a lot. Your credit scores are not stagnant numbers. They can change in a short amount of time because of making payments or using credit.
If your different scores are incredibly off from one another, it may not be anything to worry about. This may be because of how scores are calculated differently. However, it could be because your creditors are only reporting information to one credit bureau instead of all three. It could be because information with one credit bureau is updated before the data is updated with the other credit bureaus.
If your credit scores are different from each other, you should try to investigate why you think there’s no reason they should be so drastically different. No need to panic, though, because having different credit scores isn’t that uncommon.
Unfortunately, not all lenders have the same preferences and criteria, so scoring ranges may differ from lender to lender. This will often depend on what credit model the lender uses (FICO and VantageScore are examples of this).
For example, VantageScore considers 661 to be a “good” credit score, while FICO considers that same score to be “fair.” Often lenders will even create their credit score ranges based on their criteria. What one lender may believe “good,” another lender may consider “very good.”
Even though credit score ranges can vary, it’s essential to understand where you fall. Lenders will often give rates based on credit score thresholds, and even a drop of a few points can put you below the threshold for a specific rate.
Knowing where you stand allows you to build your credit before applying for a large loan or understand what deals you’re eligible for currently.
Other Factors Lenders Consider
When it’s time to borrow money, a good credit score isn’t the only thing lenders consider. Having a great credit score doesn’t guarantee you the best interest rate, and having poor credit doesn’t mean you won’t get approved.
Lenders look at whether or not you can afford to repay the credit you’re applying for. To do this, they will often look at the debt you hold and the income you’re bringing in. This is your debt-to-income ratio.
This ratio considers your income and any mortgages, auto loans, student loans, personal loans, alimony or child support, and credit card payments. If they determine your monthly debt costs are too high, they will be hesitant to add to that debt.
While debt to income does not directly impact your credit score, it is part of what lenders consider when evaluating you. For this reason, it’s essential to consider it along with your credit score.
How Credit Score Ranges Affect Your Life
If your score is lower than 600, you may be able to get credit, but it will often come with high fees and interest rates. We already mentioned a few of the other ways that credit scores can impact your life. We’ll cover some of the lesser-known ones below.
- Employment: 47% of employers check credit scores during the application process. They check because having a high credit score can be an indication of trustworthiness. However, having a low score can indicate a candidate is less trustworthy or not financially savvy.
- Insurance: Since credit is linked to the reliability, many insurance agencies will take it into account. They calculate their credit-based insurance score to predict the likelihood you will have an accident or file a claim, and credit scores are a part of this calculation.
- Utilities: When you open an account to get water, electricity, and heat at your house, the company will likely run your credit. If your credit score is low, you may have to pay a hefty deposit. This is because you will be perceived as a more risky account than one with a high credit score.
- Apartments: Most people know that a good credit score is required to take out a mortgage loan, but not that apartments often require good credit. Landlords will often look at your credit score to determine if you will make rent on time. Those with a low score may pay higher deposits or may not be approved at all.
That being said…
Since your credit score impacts so many areas of your life, monitoring your credit score is essential. There are several ways to do this. Many credit card companies offer free credit reports, and so do many banks. A free online credit monitoring service is another excellent option.
Once you are familiar with what credit score range you fall into, you can begin to understand what types of loans and benefits you qualify for. If you need to repair your credit to acquire a particular loan (like a mortgage), you can begin to take the necessary steps to do so.