What is Your Credit Score?
Many people have asked what we feel is a good credit score. While some of us have our opinion on what we feel is a “good” credit score, this is very subjective. A good credit score is normally defined by the creditor when applying for credit or a loan. As a rule of thumb, the following should be used as a guideline to determine what is good credit:
- Excellent Credit: 750+
- Good Credit: 700-749
- Fair Credit: 650-699
- Poor Credit: 600-649
- Bad Credit: below 600
In this article, we are just going to briefly touch on what each credit category means, and what you can do with it. Each range will unlock additional financial freedom. Before we start, be sure to check your credit score for free at Credit Sesame. Now let’s begin!
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Excellent Credit: 750+
If you have excellent credit, then you will have no problem obtaining a loan. Interest rates will be very low or even non existent in some cases. You will qualify for vehicle offers where you can pay no money down and have 0% financing for a short duration of time. Mortgage interest rates will be very low. Loan approvals will be all but guaranteed, with the ability to request large sums of money at one time from multiple banks. Insurance rates will be cheaper.
Good Credit: 700-749
This is where quite a few people fall into. Once your credit score is in this range, a lot of doors open up for you financially. Loans will typically have low interest rates if you also have a solid income to go with your score. Almost anything you apply for outside of business loans will more than likely be approved. You can finance just about any car close to the actual cost of the car (no inflated sale price or interest rates). Most (if not all) credit card companies will accept you into their reward card programs.
Fair Credit: 650-699
If your score is in the fair range, you are knocking on the door to even greater financial freedom. The majority of Credit Card providers will accept you (some even with cash rewards) for an unsecured credit line. Most loans you apply for will be approved with some pretty low interest rates. You can comfortably shop for a home and get good rates as well. You will be able to get into just about any apartment community when you’re in this range.
Poor Credit: 600-649
If your credit is considered to be poor, more than likely you have one or two negative items on your credit history or moderate/high credit card usage. It will not take long to fix your credit enough to be considered Fair or Good. There are some credit cards that you can qualify for which are unsecured. You may be approved for a loan, but based on the finance company the interest rate may be somewhat high. If your credit score is in this range, then I would suggest seeing how I increased my credit score.
Bad Credit: Below 600
People with bad credit typically have quite a few negative marks in their credit history, or high credit usage. It typically will take a lot to get back on track. You will have a heard time being approved for a loan (auto or home). In some cases, you can even have problems even renting a car as some rental car agencies require a credit check. You more than likely will have to obtain a secure credit card (see Secured vs Unsecured Credit Card article) and have to pay a lot down in order to have a credit card. If you’re trying to obtain a car, you more than likely will have to go through a sub prime lender or buy here, pay here car dealership (see Bad Credit Auto Loans article).
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You’re In Control
You can work your way to having excellent credit. This is not limited to those who make high-dollar income or people you would consider rich. I know people making less than minimum wage with an excellent credit score. It all comes down to how well you manage your finances. You’re the one that is responsible for making sure everything is paid on time. You also control your credit card usage and everything else that is reported to the credit bureaus. Everything on your credit report can be fixed with time or the proper strategy to address it. Thank you for visiting The Credit Dojo. Once again, I hope you’ve learned something today.