What’s a Bad Credit Score and a Good?

What’s a Bad Credit Score and a Good

Credit scores are generally used by banks and lending companies to determine the eligibility of a borrower (like for a home or car). This will also be their reference in making the terms of their offer.

Higher credit scores will lead to favorable loans and build more trust and confidence on the part of the creditor. But how do we know what’s a bad credit score and a good? Read on to know more.

Types of Credit Scores

There are several types of credit scores available. FICO Score and VantageScore are the most common ones, both operating with specific credit score range.

FICO Score

Most lenders used FICO credit score when providing loans. This serves as a reference in granting the terms and the rates of each granted loans.

FICO scores are determined using the individual’s credit file. Thus, it is important to review your credit reports for any discrepancies and ensure that it is accurate and updated. FICO scores usually range from 300–850.

VantageScore

The VantageScore is a credit score developed by major credit reporting bureaus—Experian, Equifax, and TransUnion.

Lenders consider this score to determine further the possible financial risk that you will be facing if the loan will be granted.

Monitoring of your VantageScore is recommended if your credit history is not lengthy. VantageScore scores usually range from 300–850.

What’s a Bad Credit Score and a Good?

We can have an overview of the typical good and bad credit score by considering the score range of the credit scores listed above.

  • Bad credit – credit score below 600. Applicants with this score are most likely to be rejected for credit and loans.
  • Poor credit – credit score is 600 to 699. Applicants with this score may be approved but with unfavorable rates and conditions.
  • Good credit – credit score of 700 to 799. Applicants with this score are most likely to receive competitive rates and better terms from lenders.
  • Excellent credit – credit score of 800 or above. Applicants with this score are exceptional and on the top of the list. They are most likely to receive the best rates and the most favorable terms.

With the scores given, it just simply shows that the higher the number, the lower the risk will be.

These numbers or ranges only serve as guides and are not set in stone. Each of the lenders has their criteria and definition of a good credit score.

To be able to have a good reputation, try to improve your credit scores and maintain them at higher values.

Related:

Is 550 a Bad Credit Score?

whats a bad credit score and a good credit score

How to Get Good Credit Score?

Improving your credit score and ensuring that it stays in good condition is a must. Proper monitoring of several factors can do this.

  • Payment history. Always make sure to pay your loan on time.
  • Utilization of credit. Keep your debts between 10-30% of your credit limit.
  • Length of credit. Try to maintain your credit accounts for a long time.
  • Mix of accounts. Combine several accounts over time.
  • New credit inquiries. Manage and be wary of your new applications in a short period.

So, what’s a bad credit score and a good? Knowing these greatly matter. These credit scores serve as the risk scores to help lenders assess your qualifications and capacity for a loan.

Consumers having higher scores are more likely to get approval on loans at competitive rates and favorable terms.

 

Related:  How to remove negative items off your credit report before 7 years?

James Willaims
 

Hey There, James here. I am the co-founder and editor of this site. I have over 10 years experience in business and 5 in the credit repair world

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