Credit Score Ranges: What Is a Good Credit Rating Range?

Your credit history is your best asset when applying for credit. Good credit scores make obtaining loans and credit cards easy, while bad credit scores make obtaining credit difficult. Creating and maintaining a good credit history now will benefit your finances greatly in the future when you are looking for the best interest rates on loans and lines of credit.

Credit Scores

Credit scores are three-digit numbers between 300 and 850 that give consumers a risk rating when opening new lines of credit. People with higher credit scores have a lower risk of non-payment on accounts while people with lower credit scores have a higher risk of non-payment on accounts. Your score is determined by how many lines of credit you have open, the length of time those accounts have been open, payment status on credit accounts and types of credit used. Lenders use this score to determine whether to approve you for a loan or credit card.

Good Credit Score Range

A good credit score range is 700 to 759. Excellent credit scores tend to be 725 or above. Lenders have their own scales which determine if you are eligible for credit with them. No two lenders are alike, and while you may be approved for a home loan with one bank, you may not with the next.

Why Good Credit History Is Important

Good credit history is imperative for getting approved for credit cards, home loans and car loans. Credit history and scores also determine the interest rate you will pay on your credit accounts. Those with great credit histories will be approved for prime interest rates while those with bad histories will pay more in interest. The difference in interest paid on a home loan between people with good and bad credit histories can reach thousands of dollars.

Rebuild Your Credit Score if You Have Bad Credit

If you have a bad credit score, your best option to obtain credit is to improve your credit history. If you cannot get approved for a regular credit card, a secured credit card can help you rebuild your credit history. To get a secured credit card, you will have to send in a deposit that will also determine your initial line of credit. For example, a deposit of $250 will result in a $250 line of credit. Making timely monthly payments on your current open accounts will also raise your credit score over time. Keep balances on credit cards low, and pay off the balance monthly. Using credit cards wisely will have a significant positive impact on your credit score.