The Credit Score Range; Explained
The range your credit score falls into is very important. It can determine whether you can get a loan, how high your credit card interest will be and whether or not you can rent an apartment. It can even influence some job prospects.
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 difficult 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 both different because they use different formulas and prioritize different aspects of your credit history.
There are other credit scores, but FICO and VantageScores are used most often. Even though there are lots of other companies that 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. There are different definitions of a “good” credit score range — they 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 obtain 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. A lot of 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 credit-range you fall in can be very beneficial. It can help you make strategic choices on when to apply 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 lots of different credit scores, it may be difficult to understand what range you actually fall in. You may have looked at your Vantage Score, only to find out that your lender is using your FICO score, which can be very different. A lot of lenders also create their own credit score scale that may have a different definition of what is fair, poor, good or excellent.
A reason that lenders may choose to use their own credit ranges is to help decide whether or not a person meets their specific guidelines. Each lender has their own 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 possibly be because your creditors are only reporting information to one credit bureau as opposed to all three. It could even be because information with one credit bureau is updated before the information is updated with the other credit bureaus.
If your credit scores are different from each other, you should try to investigate why, especially if 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, Vantage Score considers 661 to be a “good” credit score, while FICO considers that same score to be “fair.” Often lenders will even create their own credit score ranges based on their own criteria. What one lender may consider “good,” another lender may consider “very good.”
Even though credit score ranges can vary, it’s important 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 certain rate.
Knowing where you stand gives you the opportunity 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 takes your income into account as well as 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 the formula that lenders take into account when evaluating you. For this reason, it’s important 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: roughly 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 reliability, many insurance agencies will take it into account. They calculate their own 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 high-risk 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 as well. Landlords will often look at your credit score to determine if you will be able to make rent on time. Those with a low score may pay higher deposits, or may not be approved at all.
The Bottom Line
Since your credit score impacts so many areas of your life, monitoring your credit score is important. 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 great 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 in order to acquire a certain loan (like a mortgage), you can begin to take the necessary steps to do so.
If you want to improve your credit, give the credit analysts at Level Up 700 a call today for a free credit consultation. We’ve had over a 3-decades, of combined experience, helping clients improve their financial position, educating clients, or by removing derogatory information that is unfair, inaccurate, and unverifiable. Help yourself get back on track to good credit, so you and your family can start Dreaming Again!
1. Learn How to Access Your Credit Score and Credit History
Now that you understand what role your credit score plays in your application, you should next learn how to check your credit score and read your credit report. You can access your credit score by checking with your credit card company, asking your bank or signing up with a free online service. This is a good way to see where you stand and what range you generally fall under.
You’re also entitled to a free credit report from Equifax, TransUnion and Experian through Annual Credit Report. It’s a good idea to review the items in your report to make sure all of the information is accurate and fair. For example, an inaccurately reported late payment on your credit report can drastically decrease your credit score. If you do find any discrepancies, it’s important to dispute any errors on your credit report with each of the credit bureaus and ensure your report is accurate.
2. Improve Your Credit Score
If your score isn’t as high as you’d like, now is the best time to start implementing changes to give it a nice boost. The way you tackle this depends on what works best for your situation. Here are a few things you can do:
- Stay current with your payments
- Lower balances on any existing accounts
- Do not take on new debt
These three things can help boost your score since they directly impact your credit score. For instance, payment history (including your ability to make payments on time!) accounts for 35 percent of your credit score. This is also the largest factor that affects your credit score, so you’ll want to stay current when possible.
Keeping a low balance impacts the next most influential factor of your credit score. 30 percent of your score is determined by your credit utilization. This is the ratio between how much credit you’ve used versus how much credit you have available overall.
For example, if a person has a $400 balance on their card with a $500 limit, they have an 80 percent credit utilization. This is high and can greatly hurt your score. It’s recommended to keep your credit utilization below 30 percent. The lower your utilization, the better your score.