How does it work?
We've all heard the terms "good credit" and "bad credit" before, but what does that actually mean?
A general rule.
Credit scores range from 300 to 850. While there’s no “magic number” that can guarantee better loan rates and terms, the general rule is that you want to be as close to 850 as possible.
Standard credit score ranges.
Ranges vary depending on the credit scoring model, but the principle remains the same: high is good, low is bad. Higher credit scores signal to lenders that you have demonstrated responsible credit behavior in the past, and will likely be a lower-risk borrower (more likely to make on-time payments). Lower scores indicate that you are riskier to the lender, that you’re less likely to repay your loan in a timely manner.
In the model below, you can see the difference between FICO ranges and VantageScore ranges:
What credit score ranges mean for you.
Your credit score can have a direct impact on your financial options. Here's how:
You might not be able to get approval for loans or credit cards. If your application is approved, you likely won't be offered great terms/rates.
You might not be able to get approved for loans or credit cards. If your application is approved, you likely won't be offered great terms/rates.
You might not be able to get approved for loans or credit cards. If your application is approved, you likely won't be offered great terms/rates.
You still might not get the best terms/rates, but you're more likely to get approved and you have more opportunity to compare options among different lenders.
You have a very low chance of getting denied loans or credit cards based on your credit score. You're more likely to get offered a low interest rate and have the most options when choosing repayment options and other terms.
According to Credit Karma, the average credit score of 18 to 24 year old college students was 630.