Here are some quick facts I think everyone should know regarding credit.
The Magic Number
Although an 800+ credit score is considered Excellent credit, a score between 740-760 will usually qualify you for some of the best interest rates.
Staying Within Range
As you begin to learn more about credit scores you will find that the score ranges for what is considered excellent, good, fair and bad credit vary among credit reporting companies.
In my opinion, when in doubt and trying to be strategic in securing the best interest rates, refer to the FICO score range when setting your score goals because they tend to be more stringent.
FICO Score Range
300-579 - Very Poor
580-669 - Fair
670 - 739 - Good
740 - 799 - Very Good
800+ Exceptional (Excellent)
Credit Lending Is Risky Business
Every potential borrower has a risk profile and that profile is created based on your credit history file and used to determine what type of credit risks you pose to potential lenders.
'There's Levels To This'
Did you know that there are five credit score levels/categories when speaking in terms of a credit score?
The CFPB (Consumer Financial Protection Bureau) classifies the five types of borrowers:
Deep subprime (credit scores below 580)
Subprime (credit scores of 580-619)
Near-prime (credit scores of 620-659)
Prime (credit scores of 660-719)
Super-prime (credit scores of 720 or above)
*Some bureaus consider a 740+ score super-prime.
Every person with a credit profile falls under one of these categories, by knowing your borrower classification you can strategically look for the best opportunities that fit your profile and limit your chances of being declined for credit and avoid unnecessary inquiries.
The 3 Big Credit Bureau Bosses
While there are other credit reporting agencies that supply versions of your credit report to potential lenders, these three companies are the ones that primarily collect and distribute the information that is used to determine credit lending outcomes.
Here are the score ranges for each bureau:
Equifax 300 to 850
Experian 300 to 850
TransUnion 300 to 850 (*150 to 950 for insurance scores)