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Credit Score Scales Explained in Details
Credit score scale is to show your creditor where you stand financially, how risky is giving you a loan. Plus it shows how do you stack up.
How does a creditor or insurer decides if your credit scoring is good enough to grant you a loan? In fact he uses credit scoring scale, comparing your results with good and average credit score. You can use it too to evaluate your chances in advance before applying for a loan or insurance. There are several scales. But the most widely used one is 300-850 scale. The higher your credit scoring number, the lower your credit risk. So chances to get a credit at a lower rate are better.
The following interest rates are calculated for $216,000 30-years loan (source: myfico.com. 06.08.2006 data).
You can call it a good credit score if you got more than 700 points. It opens new possibilities for you. With good credit score you are desirable client for any bank or insurance company.
If you got more than 760 points, prepare to pay the lowest rates. Your good credit score is the essential element of your financial successes and prosperity.
Credit scoring of lower than 600 provide its owner with higher interest rates. If your number is at the bottom (300 points) of the credit score scale or close to it, you may be rejected a loan at all. But bottom points at the credit report scale are only 2% of the whole national credit scoring distribution. Meanwhile good credit score is typical for 85% of the whole national distribution.
| If your credit score is… |
then you pay interest rate of … |
Credit scores of lower than 600 provide their owners with higher interest rates. If your number is at the bottom (300 points) of the credit score scale or close to it, you may be rejected a loan at all. But bottom points at the credit report scale are only 2% of the whole national credit scoring distribution. Meanwhile good credit score is typical for 85% of the whole national distribution.
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| 760-850 |
6,3% |
| 700-759 |
6.52% |
| 680-699 |
6,57% |
| 660-679 |
6,91% |
| 640-659 |
7,34% |
| 620-639 |
7.89% |
Average credit score is about 703 points. But most of the population (27%) shows 750-800 results. So compare your result with average credit score. If your number is good, you’ve got nothing to worry about. If your result is lower than average, hurry up and do something to turn it into a good credit score. Learn how to do that at our Credit Report Repair Section.
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TIP of the day:
Get copies of all three credit reports six months before you apply for a home loan.
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