#Credit Score Ranges

Credit Score Ranges: What s Good and What s Bad

A person s credit score is used to determine whether or not he can qualify for additional credit such as loans, credit cards, and mortgages. It also plays a role in determining how much car insurance will cost, whether a person will be hired for a job, where someone can rent an apartment and more. Consumers can check their credit reports for free once a year, but reviewing a credit score isn t much good if you don t know what the number means.

Each one of the different credit bureaus reports scores differently, so the numerical score may vary somewhat between them. Nevertheless, a standard score will range between 300 and 850, with higher scores being preferable. Here is a breakdown of credit scores:

720 to 850 is excellent credit. People with these scores are able to get the best interest rates and highest credit limits.

680 to 719 is good credit. People in this range will qualify for nearly any credit they apply for, although the rates will not be as good as people with excellent credit. This should be sufficient for obtaining a home mortgage or other major loan.

620 to 679 is fair credit and the lowest score you can have while still qualifying for a home mortgage with decent terms. Other types of financing options for small-ticket items should be available to you as well, although you will not have the same flexibility as someone with higher credit.

580 to 619 is poor credit. You may still qualify for loans, but the terms will be very bad and you may not qualify for certain types of programs. Any financing you receive will have high interest rates and associated fees.

500 to 579 is bad credit. People in this range cannot qualify for most auto loans, and all financing options will cost at least twice as much in interest as people with higher credit. You may also have a difficult time qualifying for rental properties or may pay higher deposits.

Under 500 is extremely bad credit. At this range, getting financing and loans is nearly impossible, and any financing program you do qualify for will have extremely high costs associated with it. You may have a hard time getting an apartment without a cosigner and employers may bypass your application.

You should always aim to keep the highest credit score possible. Good credit happens when individuals pay off their debts in a timely manner. The more debts owed, the worse the credit score will be, especially if those debts have been repeatedly paid late or if they ve defaulted.

Fortunately, it is possible to improve your credit. By paying off existing debts and being smart with future financing, you can slowly begin to raise your credit score. Even if you don t qualify for lines of credit, you can improve the overall credit score by keeping household bills in your name and making regular payments. It s also possible to obtain a credit card specifically designed for people with poor credit; although the terms will not be ideal, it gives you a place to begin.

The best way to maintain your credit, however, is to never let it drop too low. By obtaining an annual credit report and monitoring your history, you can see negative trends and take necessary action to prevent further damage to your credit. Be sure to pay off your debts quickly and never take on more credit than you can afford. This way, your credit score will work in your favor, rather than holding you back, the next time you need to borrow money.