A credit score is a three-digit number that lenders used to determine whether they should give a loan or not. The most likely thing lenders check in your credit inquiry is how you’ll manage to repay your loan as you continue paying your bills. The lending companies pull down information from your credit reports to see if you qualify for a loan.
Your credit score status can make you qualify for a loan or disqualify your loan application. With a low credit score, your chances for loan approval are very minimal. But still, they can approve you if you’re going to pay the high-interest rate or put money on a deposit.
As a borrower, you also have to know where your credit score range falls. This can help you see whether you can qualify for a new loan or even a credit card.
Here are some of the credit score ranges to look for.
Exceptional Credit Score Range
Exceptional ranges from 800 to 850. With this range, lenders consider you more responsible in managing your borrowing. You can qualify for the lowest interest rate. If your credit score is at this level, you probably have no late payment history. And your credit card balances are also very low.
You’re at a lower risk of default, thus entitled to lower interest rates on mortgages, loans, and credit cards. Having an excellent credit score also enables you to qualify for a personal loan with no collateral.
Very Good Credit Score Range
This range starts from 740 to 799. It indicates that you’re financially responsible with matters concerning money and credit management. You ensure all your payments are on time. Your credit account limit is always on top of your credit card balances.
Good Credit Score
The credit score range is 670 to 739. This is slightly above the average consumer in the United States since their average FICO score is somewhat above 700.
Qualifying for certain credit types becomes difficult if you’re in this category because earning interest is very competitive. To get an unsecured loan in this stage, you have to shop around to get the best suitable options for your needs.
Fair Credit Score
In this category, lenders can still consider your credit but at a low, competitive rate. Most of the options here are limited, but you can consider getting a no credit check loan, which will not further affect your score. Or go for a personal loan, which is more reliable. Credit score ranges from 580 to 669.
Poor Credit Score
Falling under a 580 credit score generally damages your credit history. Some of the factors that can make you fall under this category include defaulting credits from different lenders. Another critical factor that may result in a low credit score is bankruptcy.
Bankruptcy remains on your credit records for seven to ten years.
Obtaining new credit is very difficult if you fall under this range. You can talk to a financial counselor if your credit falls to get it back on track. If you want to get negative marks from your credit, make sure you pay the monthly fee. This will make the credit repair company remove that negative mark.
