While the FICO and VantageScore chart above give an overview of how lenders might interpret different ranges of credit ratings, lenders and other companies can and often have different views on creditworthiness.
While these scoring ranges serve an educational purpose, lenders will eventually set their own standards for what they consider to be a good credit rating. Lenders can internally use options for the above ratings and while one bank may offer its best interest rates to people with a FICO rating of 720 or higher, another lender can only provide these best rates to people with a rating of above 740.
In fact, scores in this range are generally considered at best average and are unlikely to yield the best loan rates. If you want a mortgage with a lower rate, this usually falls into the FICO rating of 760 or higher. There are some types of loans that are difficult to obtain with that many points, but there are still mortgage options with poor credit.
In general, the higher your credit score the more likely you are to get approved for loans with better terms including high interest rates and small balances on credit cards.
Generally, the higher your score, the lower the risk and the more likely it is that lenders will provide you with a loan. In general, many lenders believe that a score over 670 is a sign of good creditworthiness, but a higher score can serve as a buffer in case of negative results in the report.
No matter where you are on the scale, always remember that there are a number of factors that can damage your credit history and help improve your score. If you fall into this range, you should start addressing any specific loan problems to raise your score before applying for a loan.
Hard credit requests that lenders will comply with when you apply for a loan, mortgage or credit card can affect your credit score and remain on your credit report for up to two years. If the lender stops updating an old account that you are not using it will disappear from your credit report, and you will be left with too little information to calculate your score. Negative credit history information can remain in your credit history for up to seven years and bankruptcy information for up to 10 years.
As long as you pay your bills on time and even make up unconventional bills like utilities and rent to your credit report, you can increase your credit to a good range and you will see that your score may even go up to very good or excellent with FICO.
With a good credit rating, you have access to new loans and accounts like mortgages, car loans and the best credit card programs, accompanied by the best annual returns and terms available. In general, having a diversified loan portfolio, including installments, revolving loans and open loans, will help you gain a higher score.
The loan utilization rate is the amount of the loan used divided by the total available credit limit. Lenders are happy with this range of FICO scores, and the decision to grant a loan is much easier to make. Borrowers in this range will almost always be approved for a loan, and lower interest rates will be offered. The reason for this interval is that the card issuer will base their final loan rate on the terms of your loan.
The credit score calculated using FICO or VantageScore 3.0 scoring model ranges from 300 to 850, where 300 is the lowest score and 850 is the highest possible range or excellent score. Specifically, the range of bad credit is 300 to 629, the range of good credit is 630 to 689, the range of good credit is 690 to 719, and the range of good credit is 720 to 850.
The FICO scale is split into five different ranges from very poor to exceptionalally, so you can quickly assess your credit health by looking at the range your credit scores are in the Fair and Poor – 0 – range.
Some lenders create their own credit rating programs but the two most commonly used credit rating models are those developed by. FICO® and VantageScore®. FICO® and VantageScore® create different credit rating models for lenders and both companies publish new versions of their credit rating models periodically, similar to how other software companies might propose new operating systems.