January 27, 2011

What is a Good Credit Score?

FICO credit scores range from 300 to 850.   The higher the score the better.   You often hear of people talking about having "good credit" which generally means a high FICO score.   So what actually constitutes a "good" score?   Well oddly it seems that getting a solid answer on that is hard to find out.   I searched various sources...

The following is from an article via Yahoo.

Excellent credit = 720 and above
Good credit = 660 to 719
Fair credit = 620 to 659
Poor/bad credit = 619 and below

 An article from last fall on Moolanomy breaks it down this way:

760 to 849 = Excellent
700 to 759 = Great
660 to 699 = Good
620 to 659 = Average
580 to 619 = Poor
Below 579 = Very poor

The website Bad Credit Repair says:

Excellent or Very good = 700 or higher
Good = 680 to 699
OK = 629 to 679
Bad = Under 620

Ask three different people and get three different answers.    Those three sources give different answers for what "good" credit score would be.

Lets say your score is 700.   The three different sources say that your score is Good, Great or Excellent / Very Good.    None of them agree on where your score falls.

Lets look at it another way.  Consider how the credit score will actually matter when you're trying to get a loan.

FICO has a calculator that shows what loan rates you might qualify based on different FICO scores.

For a 30 year fixed mortgage the example interest rates are as follows:

FICO score APR
760-850 4.419%
700-759 4.641%
680-699 4.818%
660-679 5.032%
640-659 5.462%
620-639 6.008%

On the other hand for a 36 month new car loan the scores and interest rates look like this:

FICO score APR
720-850 4.886%
690-719 6.389%
660-689 8.308%
620-659 11.872%
590-619 17.693%
500-589 18.677%

Of course these are just examples of typical rates so don't expect you can run out and get these exact rates based on a given FICO score.

You can see that a 720 score will get you the best interest rates on the car loan but it won't get you the best rates on the home loan.   How good your score needs to be depends on what you want to do with it.  I'd assume that banks scrutinize home loans a lot more since they are loaning out a lot more money.   So it would make sense for them to demand the very best scores to get the best rates.

If your credit score is over 760 then you're in the top bracket.  Every source I found seems to agree with that. 

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