What is a Good Credit Score?

These days, your credit score influences more than you might think. Most of us tend to think of credit scores when we are planning to buy a home or a car. But your credit score can influence some surprising aspects of your life, such as your car insurance rates or even your job prospects!

And, because a good credit score can help you obtain better credit card or personal loan interest rates to cover emergency expenses, working on your credit score could even be considered “disaster preparedness”.

There’s just one problem: Many people have no idea what a “good” credit score is! How can you set a goal to improve your credit score, when you don’t know what the goal should be?

Often, that problem is exacerbated by the fact that the various credit bureaus each analyze and report your information differently. If you check your credit score with three different credit reporting agencies, you will probably receive three different scores. However, in most cases they won’t be too far apart from one another.

So, what types of scores should you hope to see on those reports? The following breakdown can help you understand where you stand right now, and how much you should work on improving your score.

• A score of 579 or lower is considered “poor”
• A score of 580 – 669 is considered “fair”
• A score of 670 – 739 is considered “good”
• A score of 740 – 799 is considered “very good”
• And a score above 800 is considered “excellent”

Generally speaking, you want to achieve a score that is at least “good” in order to gain approval for a home loan. Some other types of loans – such as vehicle loans – might accept you with a lower score. However, the trade-off will be much higher interest, because you are considered a greater risk by the bank.

Since high interest rates will equal a larger payment, it is usually best to work hard on your credit score before signing up for a loan of significant size. It will save you money in the long run and help you to maintain a better financial standing. Contact us for more information on building a good credit score, and we will show you the steps you need to take.