What’s a good credit score?

[Britney]

Hi. I’m trying to build my credit, and so I would like to know whats a good credit score, and how much time it takes to get one? Thank you.

[Tracy Winters]

Re: Whats a good credit score

People would probably reply with “above 700” to your question. Any score above 700 indicates that your credit management is good, and with such a score you’re likely to get approved for most credit cards and loans, with very good terms.

This, of course relates to Fico, which is in the scale of 300-850. Fico is the only score that counts because 90% of all creditors use it for making decisions.

However, Fico scores (or any other credit score) are not everything. Your actual credit report is much more important, and most creditors will examine it before making a lending decision.

For example, you won’t be able to get a Mortgage these days without a clean credit report regardless of your credit score.

Your Fico score is also use to determine the terms you’re likely to get on a loan, as can be seen in this table. With most lenders, a Fico score of 760+ will get you the best terms. A credit score between 700 – 759 will get you good terms.

However, since there’s no singe “score cutoff” used by all lenders, it’s difficult to say whats a good credit score outside the context of a particular lending decision. For example, one creditor may offer lower interest rates to people with FICO scores of 680+, while another may use 720+ for these rates.

Another issue is the score itself. Mortgage lender uses a different version of Fico formula (called ‘Factual’) that is especially adapted to their needs. Car dealers have their own version called ‘Auto Enhanced’. The score that you can get as a consumer from myFico or any other paid service is a generic version of Fico (called ‘Standard’) and can be up to a 100 points off! (See Understanding FICO Scores for more information).

Lastly, many other factors come into effect when making a lending decision. These include length of loan, your employment status and salary, down payment, securities and many more.
See what-are-good-credit-scores.html for a more detailed explanation.

[Author]

Posts