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Whats a Good Credit Score?

what is a subprime credit score

Knowing whats a good credit score has important implications, as our credit score levels are used to assess our eligibility in so many areas of life: getting a home loan or auto loan, good insurance rates, employment and so on. The FICO credit score scale starts from a low of 300 and goes all the way up to 850. The higher your score is, the more credit-worthy you will be considered. Let’s take a closer look at what credit scores are considered good.

Excellent Credit Score Range: 760 – 850

If your credit score falls in the range of 760 or higher, you have an excellent score. You will likely be able to take advantage of the lowest interest rates when applying for loans. Likewise, it is likely that one would also be given excellent mortgage terms.

Given that one’s credit score rating is evaluated when attempting to get a new cell phone subscription, rental approvals, and even employment eligibility, an excellent credit score also means that such activities would be completed quickly and effortlessly. Most likely, this is the range of score from people who have never had to file for bankruptcy and always settled their bills and payments promptly.

Very Good Credit Score Range: 720 – 759

Many begin wondering if their credit score is good enough upon realizing that their rating is below the 800 mark. There is no need for concern however, since low interest rates and superb terms are widely offered to those with a credit score within the range of 720 to 759. Much like individuals with higher credit scores, people considered to have a very good credit rating have almost perfect record when it comes to handling their bills, payments and credit limits.

Of course, some would wonder as to what sets the two abovementioned score ranges apart. Before 2008, excellent and very good scores are essentially very similar from the perspective of a lot firms. However, with an economy that has gone through a mortgage loan crisis and the continued lackluster performance of the it, a lot of companies and lenders have become more stringent in assessing credit score requirements. Some lenders have upped their credit score requirements, and some say 740 is the new 720.

So, even if you fall within this very good range, it is advisable for you to continue with your great personal finance management efforts and to build up your score further.

If you are interested in specifics related to credit scores and buying a house, you may also want to check out this article, What Is A Good Credit Score To Buy A House?. Besides home loans and mortgages, another area that concerns many whether their credit score is good enough to buy a car. A useful article for on the topic is available here: What Is A Good Credit Score To Buy a Car?

Good Credit Score Range: 680 – 719

The high 600s to low 700s is a pretty safe range to be in. Considering that the median credit score is 723 and the average credit score around 687, this is just about the average score range. One should always remember than although having an excellent or a very good score will always be an advantage, it is not always necessary in ensuring that banking institutions, insurance providers, and even lenders would give remarkable offers. So this is credit score range that will allow people to access good mix of loan or credit card options and get approvals on various kinds of creditworthiness dependent applications.

A rating that falls within the range of 680 to 719, while by no means excellent, is considered a reasonably good credit score synonymous with average financial health. Hence, even though the rates and terms provided to people with a good credit score are not as impressive as those given to the “very good and excellent” crowd, the differences can be rather minimal. Percentage-wise, the gap in rates is often as little as 0.5%.

To further understand how your credit score came about, take a look at the main factors that affect

your credit score .

Fair Credit Score Range: 620 – 679

The answer to the question of what a good credit score is, is not always encouraging. While the credit score ranges discussed above are associated with benefits and convenience in terms of transactions, their “lower” counterparts are linked with challenges. At the 620 – 679 level, a few challenges can slowly begin to show up. This range of credit scores is lie just below average credit score levels.

In particular, people with a fair credit score would find out firsthand that requesting for a loan is a hit-and-miss endeavor. You may have to do a little more searching, but getting a mortgage or auto loan is definitely possible. In most cases, the interest rates are still reasonable as you are not deemed a subprime borrower.

Subprime Credit Score Range: 550 – 619

Anyone with a credit score number of around 550 to 619 is getting into the territory of bad credit. You can still be approved for various home and auto loans, but the interest rates and terms are going to be tougher.

Aside from this, trying to get a home loan is still possible, but your end up paying hefty subprime interest rates. The task of finding an apartment rental can be made much more difficult by this low credit score rating, as landlords are leery of not getting paid on time. There will be more challenging, but not impossible.

All said, if your credit score falls within the subprime 550 – 619 range, it would be a good idea to reverse the trend and take actions to boost up your score. If your score slides further down, you can expect more challenges to appear if you were to apply for loans, housing, insurance, and even employment.

Deep Subprime Credit Score Range: 300 – 549

It would be safe to say that any credit number below 550 is the complete opposite of a great credit score. This range represents the bottom 7% of credit scores. Some people call this the deep subprime level. With a bad credit score, you will have problems getting approved for most mortgage and car loans. Along with that, you may have to be prepared to face obstacles in credit card applications, apartment rentals, and being offered a job. You may have problems getting approved for a regular unsecured credit card, but a secured credit card application can still be approved rather smoothly.

As much as this is an unfortunate credit range to be in, you may still be able to find a few home and car loan options open to you, especially if you are above the FICO 500 level. Federal Housing Administration (FHA) housing loans, a government backed mortgage program, requires a minimum credit score of 500 to qualify for a loan.

At this FICO score range, it’s a really good idea to raise your credit score. or you will end up facing all types of challenges with getting loan and credit approvals, along with being charged higher subprime rates. The chances of getting a job can also be impacted the worse your credit history is. About 47% of employers surveyed in 2009 said they checked the credit report of candidates before hiring.

Conclusion and Parting Thoughts

By failing to maintain, and in some cases improve, one’s credit score, it is only to be expected that a myriad of issues would emerge. Among such problems, the lack of financial options in getting mortgages, car loans and credit cards, and payments in the form of higher interest rates are the most worrisome.

As implied beforehand however, bad credit ratings are not permanent. After all, it is always possible to either carry out several credit-boosting activities firsthand or seek assistance from credit repair firms. Some initial steps to take are to get a free annual credit report and purchase your credit scores. Finding out where one ranks on the credit score scale (ie. good, average or bad credit) is a good step, because then one would know whether there is a need for immediate action.

Category: Credit

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