Are you wondering, what does a credit score of 840 mean? Or, is a credit score of 772 good? If you have asked these questions, or similar ones, now is the time to learn more about your credit score and how to improve it so that you make sure that you end up with a good credit score.
In general, credit scores that range from 690 to 719 are considered “good.” Scores over 720 are “excellent,” and 630 and 689 are “fair.” If you have a credit score that is under 630, you are in the “bad” credit range.
Both FICO and VantageScore, which are the two most well-known agencies for compiling credit scores, use a range of 300 to 850 when assigning credit scores.
What Is a Good FICO Score?
The Fair Isaac Corp. is the institution that created FICO in 1989. They were the first company to develop an in-depth credit scoring system. When determining your score, FICO utilizes information provided by all three major credit reporting bureaus – Experian, TransUnion, and Equifax.
The FICO score you are given provides information about your creditworthiness. As mentioned above, FICO uses a range of 300 to 850.
To be considered “good,” your FICO score should be between 670 and 739, according to information from the company’s website. Fair scores range from 580 and 669, and very good scores are between 740and 799.
If you have a score that is 800 or above, you are considered to have exceptional credit (according to FICO).
In 2021 the average credit score, based on FICO’s information, was 716 which is considered good credit.
What Is a Good VantageScore?
VantageScore is FICO’s primary competitor. The company produces credit scores similar to FICO’s, also by using the information provided by the three credit bureaus.
Just like FICO, VantageScore classifies credit ratings on a good and bad system. The following ranges apply:
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- 780: Superprime
- 661-780: Prime
- 601-660: Near prime
- Under 600: Subprime
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In July 2021, the average VantageScore was 693.
What a Good Credit Score Can Get You
It’s important to have good credit. This is because it determines a multitude of things, like if you can get a loan, a credit card, as well as the amount of interest you will have to pay.
You may wonder, “is a 585-credit score loan available?” Some of the things a good credit score can help you get include:
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- The ability to open new credit cards to cover costs during an emergency.
- A mortgage with a good interest rate.
- A desirable car lease or loan.
- An unsecured credit card with a decent interest rate.
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Having a good credit score can help in other ways, too. For example, in some states, people who have a higher credit score will pay less for their car insurance. Also, many landlords use your credit score to determine if they will rent property to you.
Because of this, having a good credit score is beneficial if you plan to apply for credit and for other purposes.
What Is a Good Credit Score According to Lenders?
Like mortgage providers and credit card issuers, lenders usually determine their requirements for “good credit.” They will use this to determine if you should be granted credit and what interest rate you will have to pay.
Generally, having a good credit score will help you get what you want or need, whether it be lower mortgage rates or access to new credit.
How to Get a Good Credit Score
If you want to get a good credit score, you have to practice good habits. Consistency, and the tips here, will help you achieve a better credit score.
Pay Your Bills on Time
Paying your bills on time is essential because this has the biggest impact of all the factors on your credit score. A late or missed payment can cause serious damage to your credit score and may stay on your credit for as much as seven years.
Credit Balances
You need to try to keep your credit card balances under the credit limits as much as you can. Try to maintain credit utilization of under 30%; lower is always better. Higher utilization will ding your score; however, the damage it causes will disappear as you pay off some of what you owe.
Keep Credit Cards and Accounts Open
While you may want to close accounts with poor service or high fees, it is best to keep it open so long as there is no real issue with your credit account.
Avoid Applying for New Credit Too Often
Every credit check will impact your score for a short amount of time. If you apply for several new lines of credit at once, it may have a more significant impact on your credit score.
Monitor Your Report
Monitor your credit report and dispute any information you think is too old or incorrect to be included.
Frequently Asked Questions
What Credit Score Do You Need to Purchase a Car?
If you have a credit score that is under 700, you may be asked about the negative marks on your credit report when you go car shopping. Also, the lower your credit score, the higher the interest rate you will likely be charged if you require an auto loan.
What Credit Score Do You Need to Purchase a House?
Getting a mortgage doesn’t require flawless credit. Sometimes you can find lenders that work with individuals who have scores in the 500s. However, the higher the score, the lower the interest rate will be.
What Credit Score Do You Need to Rent an Apartment?
Property managers and landlords aren’t searching for individuals with perfect credit scores. They are really more interested in the information that is in your credit record, as it lets them know if you are likely to pay your rent and any other costs that occur.
As you can see from the information here, your credit score impacts your life in many ways. Because of this, it is a good idea to monitor it and make improvements as you can.
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