Credit Applicants Beware: What is a Good Credit Score?

Credit applicants know that having a good credit score is imperative, however they know there are myriad other factors, too.

One of the most common types of credit scores is FICO® Scores created by the Fair Isaac Corporation. The FICO® Score is a Credit rating that ranges between 300 and 850. Typically used by creditors, such as banks providing mortgages loans and credit cards.

Auto dealerships financing automobile purchases, use credit scores to make conclusions regarding whether to provide you credit and exactly what the terms of the loan (like the interest rates and down payments) will be. Utility company’s, cellular company’s and landlords also use credit scores and credit history to determine a person’s creditworthiness. There are several distinct kinds of credit ratings. FICO® Scores and scores by VantageScore are just two of the most frequent kinds of credit scores, but more industry-specific scores also exist.

Credit applicants and lenders

Lenders normally use the 3-digit credit rating to help them determine if they will accept you for a loan or credit card. Generally, the higher your score, the better your odds of getting approved. Having a fantastic credit rating can also help you save on interest rates and down payments. Obviously, a particular score does not guarantee you’ll be qualified for credit or find the lowest interest rates, but understanding where you stand can help you figure out which loans and credit cards to apply for.

Credit applicants should make sure they know score ranges. While each lender has their own distinct criteria for lending, a 700 and greater (on a scale of 300 to 850) is normally considered great credit. However, this does not mean you are guaranteed to be approved for the loan you have applied for. There are other factors you that are considered. One of the factors is your debt to income ratio may not align with the lenders loan criteria, therefore the loan may be denied.

FICO Score Ranges for Credit Applicants:

Credit Score	Rating	% of People	Impact
300-579	Very Poor	17%	Credit applicants may be required to pay a fee or deposit, and applicants with this rating may not be approved for credit at all.
580-669	Fair	20.2%	Applicants with scores in this range are considered to be subprime borrowers.
670-739	Good	21.5%	Only 8% of applicants in this score range are likely to become seriously delinquent in the future.
740-799	Very Good	18.2%	Applicants with scores here are likely to receive better than average rates from lenders.
800-850	Exceptional	19.9%	Applicants with scores in this range are at the top of the list for the best rates from lenders.

Good VantageScore?

The VantageScore is also a common type of credit score used by lenders to determine their risk of a person. The VantageScore was developed by the three major credit bureaus – Experian®, TransUnion®, and Equifax® – use a general purpose credit score number between 300-850. It is based on a proprietary model used to predict the risk of a person. Their algorithm calculates a score using data previously report lenders and from public records. A credit score of 700 or above is normally considered great. A score of 800 or above on the exact same range is regarded as excellent. Higher scores reflect greater credit decisions and will make creditors more assured you will pay back a loan.

VantageScore Ranges:

Credit Score	Rating	% of People	Impact
300-549	Very Poor	16.7%	Applicants will not likely be approved for credit.
550-649	Poor	34.1%	Applicants may be approved for some credit, though rates may be unfavorable and with conditions such as larger down payment amounts.
650-699	Fair	18.3%	Applicants may be approved for credit but likely not at competitive rates.
700-749	Good	12.6%	Applicants likely to be approved for credit at competitive rates.
750-850	Excellent	30.3%	Applicants most likely to receive the best rates and most favorable terms on credit accounts.

Your credit scores matter, it is a decision-making tool for businesses. The better you score the more likely you are to get a loan or a lease and the less you will pay in fees. To learn more about why a credit score matters Click Here