What is a respectable credit score?

Posted on: 31 Jul 2024

A credit score is a three-digit number that provides an overview of your credit status to interested lenders. A FICO score is also known as a credit score and is a number that ranges from 300 to 850. The lower the score, the more dangerous you are to the creditors as they will lose money on you. As a result, what is acceptable as a credit score? Below is an outline of various credit score categories and what they entail:

800 and Above – This is the level of credit that is classified as exceptional. An 800 and above credit score is usually considered excellent. This places you in the best-risk category of credit consumers who are highly unlikely to default on loans or other credit products. The percentage of consumers with this credit rating is approximately 20 percent. This is a very high score and you can practically get approval for any type of loan, or credit card with the lowest possible interest rates. You will also get cheaper auto and homeowner’s insurance.

740 to 799: Very Good Credit The very good credit tier spans the range of 740 to 799 inclusive of the credit score range. This credit score range applies to about a percent of the consumers. Even those who have very good credit scores can borrow whatever type of loan they want at reasonable interest rates despite being slightly higher than the best rates for the best borrowers. You can obtain the best credit cards with the best reward schemes and can secure apartments on lease without any hitch. In summary, a very good credit position provides flexibility in managing the amount of money.

670 to 739 - Good Credit Credit scores ranging from 670 to 739 are considered good. This range targets the largest number of consumers, which is at about percent. If you have good credit, you can qualify for conventional credit cards and auto loans at fairly attractive interest rates. Every landlord will agree to a rental application if the tenant has good credit records. You should be able to get approval for a mortgage, although you may need to take a FHA mortgage that will need a lower minimum down payment than a conventional mortgage. In conclusion, good credit enables one to gain credit at a reasonable price, which is suitable for the credit required.

580 to 669 – This is considered fair credit. The fair credit category is in the range of 580 to 669. It is in this area that 15 percent of consumers have credit scores. Individuals with fair credit ratings can also secure approval for credit cards and loans for subprime borrowers, those who have some bad credit history. However, interest rates therefore the borrowing cap are normally more serious compared to good credit. You may also have to deposit money to open utility accounts and meet the requirements for renting a home. Establishing fair credit to good credit rating can increase your chances of qualifying for more affordable mainstream credit products.

300 to 579 – Very poor/bad credit. The very poor and bad credit range is below 580, and it involves approximately 14 percent of consumers. This group struggles most when it comes to getting decent credit products such as credit cards, mortgages, and auto loans. Some other requirements followed by many landlords include; Credit Score: Many landlords also refuse to lease to candidates with poor credit scores. Those who can get loans can prepare to pay very high interest charges given the risks that the funders are exposing themselves to. Interest rates for late payment and penalties are higher in bad credit accounts as compared to those with good credit. Elevating a very poor credit score into a fair range requires time and consistency in following the necessary steps.

What Is Deemed as a Good Credit Score? Therefore, using this credit score range, a suitable credit score is considered in the good credit score range, which is 670 and above. Any score getting to the good range should enable you to access most of the conventional credit instruments at fair charges if you need credit cards, auto loans, or mortgages. Tenants with good credit history will also have their rental applications accepted by landlords with ease.

It is equally important to strive to raise fair credit scores within the range of 580-669 to a good standard. For instance, a person with a 620 FICO score will be charged more interest on loans than a person with a 700 FICO score meaning they will end up paying an extra $50,000 or more in interest charges over several years. Merely moving from fair to good opens doors to more attractive funding rates.

You will also wish to keep up excellent 740 and above or preferably excellent 800 and above scores. However, hand scores above 670 are the threshold for creditworthiness with access to cheap rates.

Building Good Credit Having established that respectable credit begins in the good credit tier, here are some best practices for holding or attaining a score above 670:

Pay all loans and credit card balances in full and on time every month; this is a key factor that defines scores. It is advisable to make payments automatically so that one does not fail to make them on time.
Ideally, use credit cards keep the balances below 30 percent of the credit limits, and always pay on time to avoid accumulating interest costs. They are detrimental to scores when large balances are accumulated.
Reduce credit applications that result in hard inquiries in your credit reports and show higher risk, within a short duration. Do not open too many new accounts at once.
There are three major credit bureaus and you should obtain copies of each report at least once a year and dispute any errors with the credit bureaus. The worst thing is that a mistake can have a rather negative effect based on scores.
Get yourself a credit monitoring service so that you can see whether either of the credit scores changes. This is something many banks and other personal finance applications provide. When it comes to scores, tracking them assists in identifying issues.

Aspiring to have good credit scores to avail of credit with more ease provides perfect freedom in all economic periods. The required credit rating should not be less than 670 for your credit report. But go further into the very good category as often as it is possible to sensibly assume more credit. 800-plus scoresIDENTITY gives the best opportunity to achieve the lowest tariffs – but only if you can enter this elite.