What is a Good Credit Score?
In our ongoing series providing information about good credit and how to maintain your credit score, we have provided the following outline to help determine what is a good credit score in todays lending landscape. Lenders look at a number of factors when considering approvals for loans and what is a good credit score to one lender may not be to another. Still, in most cases it can be determined what is a good credit score to most lenders.
Do You Know Your Credit Score?
Your credit score is simply an assessment of your credit worthiness based on your past financial history with loans, credit cards, mortgages, and other financial instruments and bills. Simply put, a mathematical formula is used to determine the risk associated with lending you money, and this assessment of risk determines what is a good credit score. The three main credit bureaus that assess your risk are Experian, Equifax and TransUnion, and they keep data on how often you pay your bills on time, how much you borrow and how often you have had difficulty in meeting your terms. Presently, the score you have achieved is a large factor in getting approved for new loans as well as what rates you can qualify for.
Your credit score is reported in numerical form, usually from 300 to 900, and the higher the score, the higher your credit worthiness in the eyes of a lender and what is a good credit score can vary. It is important to remember that lenders have the final say as to what is a good credit score. When applying for a new loan, the lender will decide what is a good credit score, though their are some commonly held standards. If you have had financial hiccups in the past, do not worry, there are still options, credit score is not the only determining factor and a lender will often take into consideration current employment and other factors when determining what is a good credit score for approval.
When determing your credit score, the credit bureaus will take into consideration the following factors:
- Late payment history
- Number of active credit lines
- Current outstanding debt
- Loans that are in default
- Age of credit history
- Number of recent credit inquiries
- Percentage of debt to limit factors
- Irresponsible bad credit actions, writing bad checks etc.
It is important to note that each of the three credit reporting bureaus have slightly different formulas for determing your credit score and a slight variation is to be expected. The bureaus do not determine what is a good credit score, but simply calculate your score and provide a report to the lenders have their unique guides as to what is a good credit score.
So What is a Good Credit Score?
Generally, it is held that a score of 650 or higher is a good credit score. What is considered good can vary based on the lender or financial institution you approach, but if you have been able to maintain a good credit score of 650 or higher it is generally viewed as being a good credit worthy risk.
This number of what is a good credit score can vary, and your credit score can swing based on short term factors such as numerous recent credit inquiries or recent increases in debt to credit limit.
Credit scores below from 600 to 650 can generally still be considered as good credit but this history shows potential for increased risk to the lender. If your credit score is below 600 points, in the fair or bad credit categories, it is not in the end of the world, with a solid gameplan we can help repair your credit and help you achieve what is a good credit score or even an excellent credit score with time.
We hope now, when you ask yourself what is a good credit score that you can answer with confidence, and we now know what our goal is for credit score improvement.
*It is also important to note, that with the credit crisis, and financial sector upheaval, financial institutions are looking to increase the standards of what is a good credit score.