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How Good Is A Good Credit Score?

By Janet Lacey
Published: Wednesday, November 11th, 2009

Your credit score is one of the most important numbers in your life. However, this number is still shrouded in mystery when it comes to a few pertinent questions like 

  • What goes into making a credit score?
  • What is the range within which a credit score falls?
  • And, “How good should a good credit score be?

With everyone telling you how good or how ‘not good’ your credit score is, and how one should work towards improving the credit score, the first thing that one needs to know is “What an improved score should look like?” To help you get an idea of the targets that you should set when you improve your credit score, we tell you here about how good a good credit score should be. 

The Credit Score Range 

The credit score range (the maximum and minimum credit scores possible) is itself a mystery. Even FICO, which holds the distinction of having devised the credit score as we know it, lists that credit scores range from 300 to 850. At the same time, they tell you that credit scores around either 300 or 850 rarely exist. But the best part is that in their own in-house manual, they claim that credit scores range from somewhere in the “low 300’s to something close to 900”! 

The Fannie Mae, the Freddie Mac and the U.S. Treasury department all differ when it comes to defining a range for the credit score. However, we can safely say that credit start somewhere above 300 and go up till 800 to 900. 

How Good Is A Good Credit Score? 

499 and below – If you are at the bottom of the credit score spectrum, then you are a nobody in the world of credit. Since scores of 300 or so are hard to find, most credit agencies describe people with credit scores of 499 and below as being “bad credit cases”. While a lot of companies may still offer you bad credit loans and cards, the terms are generally very strict, the interest rates are too high and you pay through your nose for every penny that you borrow. If your score falls below 499, then you should take serious steps to improve your credit score using all possible means. 

500 to 580—Even if your credit falls between 500 and 580, you have no reason to rejoice. This is still counted as bad credit and you will be paying exorbitantly and getting outrageous terms on your loans. 

580 to 620 – This is the range where you can easily get loans and credit. Unfortunately, these will not be on good terms. The score below 620 is the area where you start going into the red as far as credit scores are concerned and anyone who falls in this category needs to take serious steps for credit improvement. 

620 to 680 –  With a score of 620 or above, you get into the good person category. Loans and credit will be available, but do not expect high credit card limits or 2% APRs. Your score is just about OK, and efforts to improve it should certainly be made. 

680 to 700 –  Any score above 680 is a good credit score. You should be able to bargain with credit agencies for better repayment terms and lower rates of interest, even if they do not offer them to you upfront. 

700 and above - The answer to the ‘how good is a good credit score’ question falls in this range. A credit score above 700 makes you a good credit bet, ensuring that you get good terms and rates. If you do not, and if your score is above 720, then this score allows you to negotiate for better rates and repayment terms.

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