What Do Credit Score Ranges Mean?
Like it or not, your credit score has power over your finances which in turn affect your quality of life. Everyone has a credit score, even if they have never signed up for a credit card in their life. While it may be less work to just pay your bills on time and hope for the best, constant credit monitoring can help borrowers stay on top of their credit, spot mistakes and identify areas where they can improve. A great place to start is by understanding the varying credit score ranges and what they mean to lenders.
Different Rating Systems
While the FICO credit score may be the most popular, there are other credit rating scales in use. For example, while the FICO score measures credit histories on a scale of 300 to 850, the PLUS score measures from 330-830. The TransRisk Score measures from 100 to 900 and Equifax Credit scores range from 280 to 850. (reference: What is a Good Credit Score)
Before you start comparing your score to the range descriptions listed below, know which scale your score is being measured on for an accurate picture of your current credit placement. Going forward, this guide will use the FICO credit score range as the basis for explaining the different types of credit scores and what they mean.
Excellent Credit: Score Ranging from 720 to 850
Borrowers with excellent credit portray a long, varied history of paying bills on time, in full and maintaining a low balance on all credit
accounts. These borrowers pose the lowest risk to lenders, so are considered for only the best interest rates and loan benefits.
Good Credit: Score Ranging from 690 to 720
Borrowers with good credit may be in the process of building to an excellent credit score. They also practice paying off credit card balances and keeping their utilization rate low, for the most part. Lenders view these consumers also as low-risk, so they may qualify for the loan terms and interest rates they prefer as well.
Fair Credit: Score Ranging from 650 to 690
When a credit score falls into this range, it’s clear to the lender that the borrower has struggled in the past. They may have missed a series of payments or have extremely high balances on one or more credit cards. They might have defaulted on a loan or inquired for too many lines of credit in a set period of time. Lenders are more hesitant to provide additional borrowing options to these types of consumers and if they are approved, the credit may come at a much higher interest rate.
Poor Credit: Score Ranging from 350 to 650
When a credit score is this low, it’s time for the individual to take drastic steps to rebuild. Maybe they filed for bankruptcy in the last 10 years. Perhaps they defaulted on multiple loans or experienced a foreclosure. At this stage, it’s best if they speak with a qualified professional who can offer them situation-specific advice on how to overcome this hurdle and begin raising their credit point by point. Lenders will most likely deny the application of these borrowers based on the high level of risk that cannot be ignored.
Individuals with credit scores in this range have limited options for loans. Those seeking credit-building financial options might consider bad credit loans online through a loan broker who pairs prospective borrowers with reputable alternative loan companies.
Limited or Non-existent Credit History: Score Ranging from 300 to 349
If a borrower has never taken out a loan or credit card, it’s feasible that their score will barely even rank. The good news is these borrowers can start small, using merchandise store cards and other secured loan or credit card options to gradually establish their own personal credit history.
It’s time to check your credit score and see how you rank. Head to AnnualCreditReport.com and access one of the three free credit reports available to you every year. Take your credit seriously and you’ll see the payoff down the road – you may even save hundreds of thousands of dollars in interest over the course of your lifetime.