Recommended Credit Score

Your credit score is a number that summarizes your credit risk as a borrower. By far the most frequently used scoring system is the FICO score, used by all three major credit-reporting agencies: TransUnion, Experian, and Equifax. FICO scores range from 300 to a perfect score of 850. As with most things in life, perfection is rare. You should know what credit scores lenders recommend so you can spot problems and work to build your own score if it's too low.

Excellent Scores

Most lenders recommend a FICO credit score of at least 700. That's considered good and it's reasonable. Credit Scoring says the average credit score is around 725. A score of 760, 770 or even higher is excellent. At this level, you can finance a home or car and obtain credit cards with little trouble. Additionally, the higher your score, the lower the interest rates you are likely to pay on borrowed money.

Midrange

Lenders generally will extend credit to persons with scores of 620 to 690, according to the Credit Scoring website. However, a FICO score under 700 indicates you present some risk as a borrower. As a result, you can expect to pay higher interest rates, especially if your score is close to 620.

Subprime

Any FICO score under 620 is subprime. It is a poor credit score and definitely not recommended. Lenders such as mortgage providers Fannie Mae and Freddie Mac usually do not extend credit if you have a subprime credit score. Those lenders who do extend credit charge significantly higher interest rates to offset the added risk. There are a few exceptions. For example, if a person has shown good credit management in the recent past, the Federal Housing Administration will accept scores as low as 580.

Fix Your Credit

If you have had credit problems and your credit score is lower than what lenders recommend, there are specific steps you should take to raise it. HSH Associates says that paying your bills on time is the most important factor affecting your credit score. You also want to pay down excessive debt, especially unsecured debt like credit cards. Avoid frequently applying for new credit or closing old accounts. Monitor your credit report, the basis for your credit score. The law entitles you to a free copy of your credit report from each major credit-reporting agency once each year. Review your credit report regularly. If you find errors, contact the credit bureau and have them corrected.