What is Considered a Good Credit Score?   by Shana Mora

in Finance / Credit    (submitted 2011-11-08)

Many people wonder what is a good credit score, and it's fairly simple to determine a good credit score and how to acquire a great rating.

There is no question that good credit opens doors and is essential to survive the fluctuations of the country's economy

A good credit history can help you

1. Secure a more affordable mortgage and auto loan and even get cheaper prices and premiums for different kinds of insurance policies and credit-based services.
2. Receive faster loan decisions from lenders. People with a superior credit history typically get quicker decisions regarding loans because a good rating instantly tells a loan provider you will be an exceptional customer.

The Fair Isaac Corporation's FICO score is the most widely implemented credit scoring method. The FICO system goes from 300 to 850, with 300 being the lowest possible rating and 850 being the maximum. The FICO scoring model works as follows:

A score that is 760 or higher is considered a great rating. Individuals with credit scores in this range have a score above the average American. Lenders considers these consumers top notch borrowers. A score between 725 and 759 is a very good score, and lenders consider individuals with this rating to be dependable customers. A score between 660 and 724 is a good score that is near the average score of American consumers. A score between 560 and 659 is not a good score, however, some financial institutions will still approve loans for individuals with scores in this range. Any score below 560 is a bad rating and most lenders consider these individuals risky customers.

The meaning of a good score changes according to loan provider or the type of mortgage or credit-based product you apply for. For instance, Fair Isaac Corp. considers a credit rating that falls around 660 to 724 to be a good credit rating, but U.S.-based financial business, American Express, requires at the very least a 750 credit score to be considered for quite a few of their credit and charge bank cards. Naturally, banks believe that a decent credit rating is relative and they typically specify their own credit expectations for customers.

In addition, the standard of a decent fico score can differ as the country's economy goes up or down, and in some cases, certain elements on your credit profile can be more harmful than the actual score itself.

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