So you’ve done your research and found out your exact credit scores. Now what? What does that number actually mean? Are they good credit scores? Or bad credit scores? Will lenders consider it to be within an acceptable credit score range when deciding to loan you money?
The first thing to know about FICO® Scores are their meaning for you: they’re one of the metrics a lender uses to identify your creditworthiness. They help lenders see how high (or low) the risk of you becoming delinquent on a loan is. Simply stated, the higher the scores the lower the risk.
The second thing to know is that each number is based on your credit report data from one of the three major credit reporting bureaus: Experian, TransUnion and Equifax. From your payment history and the amount of your outstanding credit to the length of your credit history and credit mix, formulas have been developed to use this data and determine your FICO® Scores.
Now that you know what good FICO® Scores are and how they’re calculated, it’s time to find out if your scores fall within the good credit score range, bad credit score range or somewhere in between.
What’s a good credit score range?
For now, we’re going to focus on FICO® Scores because these are the scores used by 90% of top lenders. Base FICO® Scores (FICO® Score 8) range from 300-850, while industry-specific (auto and credit card) FICO® Scores range from 250-900.
For a better idea of credit score ranges and what they represent, here is a summarized analysis of FICO® Score 8 credit scores:
Score: Exceptional. This credit score range is way above the national average and borrowers within this range will most likely not have a problem getting credit.
Risk: Low. About 1% of consumers with credit scores of 800+ are likely to become delinquent.
740 to 799:
Score: Very Good. This score range is also above the national average and borrowers in this range are at a great advantage in both the likelihood of getting credit approval and being offered lower interest rates.
Risk: Low. About 2% of consumers with credit scores of 740-799 are likely to become delinquent.
670 to 739:
Score: Good. A “median” range, this score identifies a borrower as “acceptable” which means he or she might not get as low an interest rate as those in a higher credit score range.
Risk: Medium. About 8% of consumers with credit scores of 670-739 are likely to become delinquent.
580 to 669:
Score: Fair. Since this score range is below the national average, these borrowers will have a more difficult time getting credit and, if they are approved, will more likely than not end up paying a higher interest rate than those with better credit.
Risk: Medium-High. About 28% of consumers with credit scores of 580-669 are likely to become delinquent.
579 and lower:
Score: Poor. Consumers who fall within this range are considered a poor credit risk and may be rejected. Many who fall within this range must often put down a deposit or pay a fee to obtain a credit card or home utility services.
Risk: High. About 61% of consumers with credit scores of 579 and lower are likely to become delinquent.
FICO also provides industry-specific scores which assess the risk on a specific type of credit obligation, namely: car loans and credit cards. FICO® Score 8 credit scores are often used in mortgage loan evaluations. The formulas that determine these scores provide lenders with a “refined” assessment tailored to the specific type of credit the consumer is seeking. Although industry-specific scores range from 250-900, you can use the FICO® Score 8 and risk descriptions above to get a good idea of what differentiates an exceptional industry-specific credit score from a poor one.
YOUR credit score range…
Now that you’re an expert on credit score ranges and good credit scores versus bad credit scores, where do your scores stand? If you’re happy with it, congratulations! Good FICO® Scores are important to your financial profile and your financial future. If you’re unhappy with it, check out some of things you can do to help improve your scores.
You can see what others are saying about their own credit score ranges and how they improved their credit score at myFICO Forum.