What Is Considered A Good Credit Score?

You may want to buy a house or a car. You may even want to get a credit card or apply for one with a lower interest rate. Knowing your credit score is a very prudent step and smart idea. But in the days of the tight economy what is considered a good credit score? Knowing exactly what a credit score is and what’s considered a good credit score is something we all need to know.

The credit scoring system can be confusing. It is not a regular scale and can vary. So knowing your real score is important. The scoring system can run between three hundred and nine hundred depending on who is doing the scoring. While this may be confusing, a credit score, also known as a FICO score, is pretty much looked upon in the same manner.

Scoring is done by the FICO system from the Consumer Federation of America and also Fair Isaac among other agencies. It is a mathematical way to determine a consumer’s value of risk when loaning money. It is calculated by your past credit history, your current history, the amount of debt you owe to current creditors and how long you have been a credit user.

What experts agree on is that a score of 620 and above is considered a good score. It’s not a perfect score, but it is high enough where you are a decent risk. Anything below this level is considered a person to be a risky investment and you will have a hard time getting anything until you raise your score.

A score of 640 and above is considered an okay score for investors to trust. The same is true with those who score up around 680 on their credit rating. But to effectively be approved for items such as a house you will need a higher score so that to easily obtain a loan.

If you have a score of 690 or above you can be assured that a loan will be underwritten for you for a home purchase. This is the basis that many companies require as minimum. You’ll also need verified income and the like to qualify for a home purchase. If you don’t have the salary necessary to afford a home your credit score alone can’t get you financed. You can get a home purchased, however if you want to ask someone with a higher rating to co-sign for you. Many parents are helping their children buy houses by utilizing their high credit ratings to purchase homes that would otherwise be unattainable.

A credit score of 700 and above is considered an excellent credit score. These show lenders that the person with this score pays their bills on time, has established credit history in a positive nature and is an overall great risk to lend money to. Numbers above this 700 score get even better in the golden arena of credit scoring.

People with these higher scores also have bargaining power when it comes to negotiating a better interest rate on credit cards and other purchases such as homes and vehicles. You can literally have companies fighting each other to do business with you because they know you will be an excellent risk. So, now that you know what is considered a good credit score you can take the necessary steps to get there if you are not already.

1 comment:

  1. credit score, 17. November 2009, 1:19

    If you have a credit card since, say, 2001 and you add an authorized person with short credit history today, credit report of that person will reflect that joint account was open 2001 (not in 2009). So you’ve just made the length of that person’s credit history 8 years. Credit score skyrockets at this point.
    This trick greatly helps newcomers to the country (if you can trust them).
    It’s funny – my boyfriend’s credit history is much longer than he’s actually been in US.

     

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