What Is a Good Credit Score?

A person's credit score is used for many things these days. Employers often use a person's credit score to determine if he is trustworthy for a job. Landlords use a credit score to determine if a person is going to pay his rent. Mortgage companies and other lenders use it to decide if a person is a good credit risk. But how many people actually know what a good credit score is? Depending on the purposes and other factors, the answer to that could vary.

Identification

The higher a person's credit score, the better it is and the more opportunities she will have for getting credit. The highest credit score a person can have is 850, according to the FICO score scale. Few people have a score of 850, which is excellent.

However, the range of a "good" credit score is between 660 and 749, but this figure is different depending on what type of company you are dealing with. For instance, a car finance company may be more lenient than a credit card company because there is a form of collateral in the value of the car if you decide to stop making your payments. Every company is different, though, and some of them will look at your particular situation in addition to your credit score before making a final decision.

Benefits

People that have a credit score that is in the "good" range typically do not have many problems when it comes to borrowing money or obtaining financing for a mortgage, car or other loan. In addition to getting loans and financing with less trouble, a good credit score results in a lower interest rate. Depending on what type of loan the person receives, the interest rate could mean a difference of thousands of dollars over the life of the loan. An excellent or good credit score also opens up more opportunities for a person as she can often apply for and obtain personal loans for emergencies, home improvements and other reasons.

Types

Credit scores are typically calculated by three major credit bureaus: TransUnion, Equifax and Experian. Many people will have different credit scores through each of these bureaus because different creditors report to different bureaus. For instance, those pesky school loans you have may only report your payments (or lack thereof) to the Equifax bureau. As a result, Equifax will have a different overall credit score for you than the other two bureaus. Some creditors report to all three bureaus. When a creditor determines if you have a good credit score, it will check all three bureaus to make a decision. If all three credit scores are good, there should be no problem obtaining financing.

Warning

A good credit score is ideal. However, there are many warnings to heed even if you do have a good credit score. People with a good credit score can easily fall deep into debt if they are not careful about the money they borrow and their payments. A couple of late payments on a new car that you obtained financing for could result in a lowered credit score. Getting too many credit cards or charging too much on your current credit cards could lower your good credit score in a matter of months. Don't let your good credit score become more of a detriment than an advantage by getting too much credit.

Considerations

When trying to determine if you have a good credit score, the credit bureaus look at several factors regarding your past and current financial situation. One of the main aspects they consider is the financial responsibility you've exhibited. They check to see how often you've paid your bills on time and how often you pay them late. Late payments will negatively affect your good credit score. They also look at how much debt you have in relation to your income, or your debt-to-income ratio. A high amount of debt with a low amount of income will negatively affect your good credit score, too. The length of time you've had credit and the number of times you've applied for credit recently can also affect your good credit score one way or the other, depending on the answers to those questions.