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What is Considered a Good Credit Score

Do you want to know “What is considered a good credit score?” Consider that your score can affect many aspects of your life. For instance:
· Mortgage lenders use the number to determine whether you get a home loan and at what rate. Knowing what is considered a good credit score can shave hundreds of dollars off your home payment each month.
· If you are renting, not buying, your credit score is still important because landlords run your credit report before deciding whether to lease to you.
· There is an unexplained correlation between good credit scores and low claims on insurance policies. So, insurance companies are increasingly pulling credit reports to decide who to insure.
· If you want to get a cell phone, you need to know what is considered a good credit score before you talk to the people at that kiosk in the mall.
· Finally, if you are considering changing jobs, you should know that many employers are now pulling credit records before making a new hire. They assume that someone who is responsible with their money will be responsible on the job.

Given all of the reasons to have a high number, what is considered a good credit score?

That number is actually kind of tricky. The credit score is ranked on a chart between 300 and 850. Very few people have credit scores in the 800s because there are so many factors that most people can’t control. On the other end of the spectrum, very few people have credit scores below 500. So the real range for what is considered a good credit score is 500 to 800.

Scores in the high 700s are considered excellent. But any score over 720 will likely qualify you for the best interest rates and the premium credit offers including platinum credit cards.

The median credit score in the United States is 723. That means 50 percent have higher scores and 50 percent have lower.

If your credit score is lower than the median, you will start having trouble accessing credit at good rates. The difference between a 700 and a 750 can mean $200 to $300 extra in monthly payments on a $200,000 loan.

A score of 620 is generally seen as the cut off point for a “high risk” borrower. In this case, if you are trying to buy a home, you will likely only qualify for a subprime mortgage. Because of the banking crisis, subprime mortgages have dried up. So people in this category may not qualify for a home at any interest rate.

Some of the things that can push you under 620 include two or more 30 day delinquencies in the past 12 months, one or more 60 day delinquencies in the past 24 months, a collection related judgment, repossession, or account charge off in the past 24 months, or a bankruptcy in the past 5 years.

I hope this article helped clarify what is considered a good credit score.