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Credit Score Ranges And Their Meaning

by | Jul 22, 2023 | News

Credit scores serve as numerical representations of an individual’s creditworthiness, indicating their ability to manage debt and credit responsibly. Lenders and creditors rely on credit scores to evaluate the risk associated with lending money to a specific person. The two most commonly used credit scoring systems are FICO® and VantageScore®. Let’s explore the different credit score ranges and what they signify:

1. Excellent Credit: 800-850
Individuals falling within this range boast an outstanding credit history. They typically enjoy easy approval for credit applications, along with access to the best interest rates and loan/credit card terms. Lenders perceive those with excellent credit as extremely low risk borrowers.

2. Very Good Credit: 740-799
People whose scores fall within this range maintain a highly commendable credit history. Although they may not receive the most competitive terms available to individuals with excellent credit, they still have good chances of obtaining favorable conditions when seeking new lines of credit. Lenders continue to view them as relatively low risk borrowers.

3. Good Credit: 670-739
Individuals in this range possess a solid overall credit history. While they are generally eligible for approved lines of credit, the interest rates and terms offered may not be as advantageous as those extended to individuals with excellent or very good credit. Lenders generally perceive individuals with moderate credit scores as borrowers with a moderate level of risk.

4. Fair Credit: 580-669
People falling within this credit range have a fair credit history. They might encounter some challenges in obtaining credit and if approved, the terms may not be as favorable. Lenders consider them to be somewhat higher risk borrowers.

5. Poor Credit: 300-579
Individuals within this credit range have a poor credit history. They often face difficulties in getting approved for credit. And if approved, they may face high interest rates and less favorable terms. Lenders regard them as high risk borrowers.

It’s important to note that the specific credit score ranges may slightly vary depending on the scoring model used. Moreover, different lenders may have their own criteria for evaluating credit scores, which can extend beyond just the numeric value. To maintain and improve your credit score, it is crucial to pay your bills on time, keep your credit card balances low and avoid opening too many new accounts unnecessarily.