What is Considered a Good Credit Score These Days

Credit is one thing we all can’t live with, yet can’t live without, at the same time. As much as we like the thought of not owing anything to anyone, there are inevitable times that borrowing is a grave need. And when that time comes, good credit score is certainly of help.

What credit score is considered good, you may ask. Let’s start off with defining a couple of things. You must know, though, that this article will focus on the most common type of credit score in America, FICO. FICO scores depend upon the information handed out by the three major credit reporting agencies, namely TransUnion, Experian, and Equifax.

All the agencies utilize FICO software in calculating credit score. Also, they have their own databases which kind of give trouble to some, considering you may have 3 different FICO credit scores that depend on the bureau that is used. However, the credit scores typically lie in a rather narrow range.

Scores range from 300 to 850. When you look into myfico.com, you will see that the median score is 723 Median defines the lines between the bottom and top halves. If you happen to have a credit score higher than 723, then you are on top half. It almost always equals a ‘good’ credit score.

However, let must be real. A ‘good’ credit score should equal something that comes with good loan rates. Say, 680 is considered to be the lower limit for prime credit, then if you go beyond such score, your score is ‘good’. However, it must increase before you can get better rates that are intended for those who have ‘good’ and even ‘excellent’ credit scores.

The most telling information is coming from Informa Research Services. They are the ones that correlated FICO scores to loan rates. Based on a 30yr fixed mortgage example, they found FICOs from 680-699 averaged 4.9% APR, those from 700-759, 4.723%, and those with 760-850, 4.501%. Since those with 760+ were categorized in the best loan rate level, should we need to draw a line at where ‘good’ begins, 760 seems perfect just as any.

If you translate it to dollars and cents on a $ 300,000 loan example, the 760+ consumer will be paying over $ 14,000 and almost $ 26,000 less over the life of their loan as compared to the next two lower scoring groups respectively. Anyway you look at it, that is ‘good.’