What a Credit Rating Score of Excellent or Good Means

When you apply for a car loan or mortgage, your lender will most likely run a credit check on you. You may be given your credit rating as "excellent," "good," 'fair" or "poor," while not being given your FICO or credit score number.



In order to understand the meaning and financial implications of your credit rating, you must take into account and understand your credit score number, your credit history and the methods used to calculate your score.

Instructions

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Frequently opening new credit card accounts may lower your credit rating.

Understand how your credit rating and FICO score are determined. There are five considerations that factor into your credit score. Thirty-five percent of your score is based on your previous credit performance. Your current level of debt counts as 30 percent. Fifteen percent is attributed to the length of your credit history. Ten percent is afforded to the variety of your credit experience and another 10 percent to your attempts to obtain new credit (this includes credit checks).

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Connect your rating to your credit score. If your credit rating is "excellent," your FICO score is 750 to 850. A "good" rating entails a FICO score of 660 to 749. A "fair" rating is between 620 and 65 and a "low" rating is 350 to 619.

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Link your credit score to what it means for you financially. If your credit rating is excellent and you have little debt, you will receive the lowest loan interest rates available. If you fall within the "good" category, you should be able to obtain loans rather easily, but your interest rates will be a bit higher than those given to someone rated as "excellent."

With a "fair" rating, it will be more difficult to obtain a loan, and you are likely to pay hundreds more dollars per month than someone with excellent credit. Those with a "poor" rating will most likely not obtain loans, or will obtain them only at extremely high interest rates, and sometimes from rather unscrupulous and predatory companies. "Poor" ratings can also negatively impact insurance rates.

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The best way to completely understand your credit rating, of course, is to obtain a copy of your credit report.

You can do so by contacting one or all of the three major credit bureaus: Equifax, TransUnion, and Experian. You may also obtain a TrueCredit 3-in-1 Credit Report, which includes data from all three credit bureaus and allows you to compare and contrast data while finding potential discrepancies between reports.