What is Considered a Good Credit Score?

What is a good credit score? That’s an important question these days, since credit requirements are getting a lot stricter. This is because of the foreclosure crisis and general recession that has caused many people to default on their credit obligations. For most people, these defaults aren’t their fault. They have to take pay cuts at work, lose benefits, or lose their jobs entirely, while expenses on other things just keep going up and up. Still, if anyone affected by credit problems now wants to get credit offered to them in the future, their credit score is going to be an important factor.

So, what IS a good credit score? The range of credit scores goes from 300 to 800, with the lowest score being the worst and the highest being the best. Most people fall somewhere in between. However, the higher your score, the more credit offers you will receive, the more likely you will be to be approved for credit, and the better interest rates you will get on that credit.

The median credit score right now is around 680. Anything over 720 is considered excellent and anything under 600 is considered poor. If your score is below 500, then it is very poor. In order to get a house loan with anything other than owner financing or a lease option, you’ll need at least a 620 in most cases (lower scores may sometimes qualify for a mortgage, but will have higher interest rates). To get credit cards, personal loans, car loans, and other types of credit, you must meet the credit requirements of the particular creditor with whom you are applying. Credit requirements differ by creditor by quite a bit, so you’ll always want to check before applying to see if it’s worth it to apply.

There is actually a very good reason to get pre-qualified for credit before applying. Each creditor with whom you apply will run a credit check on you and each credit check on your report lowers your score. You want to keep credit checks to a minimum to maintain a good credit score. Follow smart credit practices, and you can always have credit available to you when you need it.

This is the ninth installment in our credit & debt series. Be sure to check back for updates…