Your credit score range tells lenders what category of borrower you fall into. Credit scores are calculated using a formula that includes five variables: payment history, amount owed, length of credit history, credit mix, and new credit.
Your credit score range can affect the interest rate you pay your lender and can even influence whether your loan is approved or denied. Learn more about credit score ranges and what they mean.
Credit score basics
Your credit score is a number that represents the risk a borrower takes when they lend you money. The FICO score is a well-known metric created by the Fair Isaac Corporation that credit bureaus use to indicate a borrower’s riskiness.
Another type of credit score is the VantageScore, although the FICO score is more commonly used. Both FICO and VantageScore have scores ranging from 300 to 850, although they divide the scores into different categories differently.
Your credit score calculation represents your credit risk at a given moment in time based on the information in your credit report. The higher your credit score, the lower the risk of a borrower.
Here are the FICO credit score ranges and what they mean.
Excellent credit score: 800 to 850
A credit score between 800 and 850 means that the borrower has been responsible in managing their loans. Borrowers with these scores are more likely to get the lowest interest rates.
People with this score have a low rate of late payments and carry low credit card balances. Consumers with excellent credit scores can get lower interest rates on mortgages, credit cards, loans and lines of credit because they are considered a lower risk of default.
Very good credit score: 740 to 799
A credit score between 740 and 799 means the borrower is generally financially responsible when it comes to money and credit management.
Most of their payments (including loans, credit cards, utilities, and rent) are made on time. Credit card balances are relatively low compared to their credit account limits.
Good credit score: 670 to 739
If a borrower’s credit score is between 670 and 739, the borrower’s credit score is close to or slightly above the average for U.S. consumers, as the national average FICO score in 2022 is 714.
While borrowers in this credit score range can still get competitive rates, they are less likely to get the ideal rates in the two higher categories, and they may have a harder time getting certain types of credit. For example, if a borrower is looking for an unsecured loan with this score, they must shop around to find the option that best suits their needs and has the fewest drawbacks.
Fair credit score: 580 to 669
Borrowers with credit scores between 580 and 669 are considered to be in the “average” category. They may have some issues in their credit history, but no major delinquencies. They may still get credit through lenders, but the interest rates won’t be very favorable.
Even though options are limited, borrowers with good credit scores who need financing can still find options.
Poor credit score: below 580
Individuals with credit scores between 300 and 579 have a severely damaged credit history. This can be caused by multiple defaults on different credit products from multiple different lenders. However, a low credit score can also be caused by bankruptcy, which stays on your credit record for 7 years for a Chapter 13 and 10 years for a Chapter 11.
You can improve your credit score by paying down debt, making timely payments, and avoiding opening new credit.
Borrowers with credit scores in this range have very little chance of getting new credit. If your credit score is in this range, talk to a financial professional about how to restore your credit.
Additionally, as long as you can afford the monthly fees, one of the best credit repair companies may be able to remove negative points from your credit score for you. If you are trying to get an unsecured loan with this score, be sure to compare each lender you are considering to determine the option with the least risk.
How to build credit if you have no credit history?
If you haven’t established a credit history, your credit score will probably be low. You can start building a credit history in a number of ways, such as with a secured credit card. These cards require a down payment as your credit limit, but as you make payments over time, you’ll build a credit history with the three major credit bureaus.
You may also consider becoming an authorized user on a parent or guardian’s credit card, or applying for a student credit card, which has lower requirements and a smaller credit limit.
What are the 5 levels of credit scores?
FICO credit scores are divided into five levels: excellent, very good, good, fair and poor. Your credit score range will determine whether you qualify for a loan and the interest rate at which you can get one.
Is it possible to get a credit score of 850?
You can get a credit score of 850, although it’s very rare. About 1.2% of Americans with credit histories have a perfect 850 FICO score.
Bottom Line
Your credit score is based on a variety of factors and is used to determine whether you qualify to borrow money, as well as the terms of your loan, including the interest rate. Paying your bills in full and on time will help prevent future damage to your credit score. Given the importance of a good credit score, it may be worth investing in a credit monitoring service to better protect your information.
