What is a good credit score?

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What is a good credit score?

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With most credit scores, the higher the credit score, the better it is. However, a "good" credit score can be difficult to define since lenders have differing perspectives on what they think is a good credit score. Banks and financial institutions determine their best rates based on their own assessment of their customers. As such, definitions will change from lender to lender and industry to industry.

The recent economic turmoil provides a perfect illustration of a changing definition. Back in the housing boom, a credit score of 680 was often considered "good" enough for a mortgage at the best rate or near the best rate. Today, homeowners will often need a credit score of 720 up to 750 to qualify for some loans.

In general, good credit scores are based on how much risk a lender is willing to take in the form of loans. On an aggregate level here are some general views on credit score ranges and how they are perceived by most lenders. Keep in mind it always completely up to the lender.

Credit Grade	Credit Score	Generalized Implications
Poor	300-549	Not considered credit worthy. Will not qualify for most loans unless it is co-signed or secured.
Fair	550-639	Considered sub-prime by many lenders. Will see limited credit card and auto loan approval. No home loans. High interest rates.
Good	640-719	Considered a good credit score in most industries. Will be approved for most credit cards, most auto loans, and some home loans. Will not be at the best interest rate.
Excellent	720-850	Considered the highest credit quality. Should qualify for the majority for loans. With credit crunch some lenders require 750+ now to receive best pricing.

You can also view the complete distribution of credit scores across the US population on Credit Karma.

Filed under: Credit

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USER COMMENTS(4)

KrysBee
Nov 3
2:17 pm

Do you happen to know why if the exact same information is included in calculating credit scores? For example, the exact same data is reported on all three of my reports, but the range in scores varies by more than 150 pts. For example, my Experian score is 760, the Equifax is 695, and the TransUnion score is 617. My oldest account is 10+ yrs old, and except for one acct which shows as delinquent (and which I am disputing) the remaining 11 accounts are all in good standing and have been for more than 7 yrs. In addition, I am using about 40% of my total available credit. Each time I apply for credit and the creditor checks TransUnion, my application is rejected but if the creditor checks Experian or Equifax, I don't seem to have a problem.

CK Moderator

That is strange. Are you getting the scores from the same source? In my experience, there has to be something different with the data. I don't recall ever seeing a 143 point different with factual data.

turbosb2
Oct 16
9:08 pm

Hate to rain on everybody ,but recently i went on to experians site and they no longer use fair isac scoreing system.I have a 740 score with them and they only rate me as a low c rating and anything under 730 is rated as a d .And im reading that transunion and equifax are getting ready to use the same system as experian if so a 740 score is no longer good . they claim a 840 to 990 is good.In all sounds like a big scam to me to keep loan rates high.

CK Moderator

That is the Vantage score. It is not a "rip" just another system with another scale.

Waddy
Sep 4
1:37 pm

Either way anniebaby your credit score of 740 should soon be at 750 or better which will qualify you across the board!

anniebaby
Jun 8
11:27 am

Under the "How Lenders View Your Credit" my score (740) falls in the "Good Category." On the "What is a good credit score" question, it's considered "Excellent." Why the difference? Thanks.

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