What Is a Credit Score Range?

A credit score represents the information in a credit report as a numeric value. This number is often used to determine not only whether or not a person qualifies for a particular loan, but also the interest rate for that loan. The higher the number, the better the chance of qualifying and getting a better rate. Lower numbers, of course, mean the opposite.

Size

A credit score can range from a low of 300 to a high of 850. Much like other number ranges, however, the minimum and maximum numbers are rare. Most credit scores will be in between the two numbers.

Significance

A credit score is often used to determine whether or not a lender will extend credit to an applicant, and if so, under what terms. Thus, a higher score can mean the difference between getting a loan or not. It can also mean the difference between getting a good or "preferred" interest rate, and a higher interest rate.

Function

A credit score is used by lenders to quickly make a judgment regarding a person's credit worthiness without the need to fully review a person's credit report. This also allows people who have less training to act as loan officers or other people arranging credit since the need to make judgments based on information in a credit report is eliminated. The number a credit score provides can be used to enable computers to make approvals which allows for "instant" approval.

Misconceptions

Many people believe credit scores are permanent or unchanging. This is not true. While the formula used to calculate credit scores is not designed to change by large amounts over short periods of time, credit scores change all the time. Bad credit scores can be raised by eliminating the "bad" behavior and adding "good" behavior.

Warning

There are numerous companies offering to raise your credit score. There is no secret method to raise your credit score. A few years ago, it was possible to raise your score by co-signing certain loans with someone that had a higher score, but Fair Issac has eliminated that loophole. Most for-profit companies offering credit score fixes are fraudulent according to the Federal Trade Commission.

Potential

Improving a credit score can be accomplished by making on-time payments to all accounts over time. Even a short period of such on time payments will improve a credit score. Thus, a high credit score is just a matter of time assuming all payments are made on time, and not too much credit has been applied for.