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What Is Considered A Good Credit Score?

October 14th, 2009

good-credit-score.jpgOne of the questions that many people ask when they are trying to improve their financial condition relates to what exactly is considered a good credit score. Yesterday I browsed around on one of my favorite forums and commissioned an article on the topic in an attempt to find an answer to this question. Today I received this article, and while it will probably not win any major literary awards, after a bit of editing it does seem to provide readers with some basic information about how the credit score number is determined and how we might improve it.


Who in the world has no credit? It is a thing that people cannot seem to live without. No matter how much we dread the idea of borrowing money, there comes a time that we will need to borrow and you must have credit already established to get a decent loan.

First you have to know what a credit score is. It is a number calculated by credit bureaus that is based on the credit history of a person to find out how credible the person is in terms of paying past and future debts. These are tracked so that creditors can have a general idea about how well you are paying down your debts, and this information can be used to determine what type of loan you qualify for.

How does credit score work?

Your credit score is calculated from a few different factors. The most important one is your payment history from previous loans. Next is the amount of your current debt. If you owe too much already then you could be at risk of defaulting before you could take on any more debt. The less important factors are the length of time you had credit, how many times your credit history is pulled up by new lenders, and finally the different types of loans you have.

What determines a good credit score?

Credit scores are measured by a weighted scale. This scale determines whether your credit score might be considered good, bad, or somewhere in between. It ranges from 300 to 850. The median score is around 720. Those who fall between 750 to 800 are considered excellent and from 720 to 750 are rated “good to excellent”. People who are in the 690 to 720 range are still considered to have a good credit score. Below this, 620 to 690 scores are “fair”, and anything below 620 is poor.

With these guidelines, you will know if you are a good borrower or not. The creditor can easily decide if it is okay for them to extend you the loan based on your overall rating. Any score above 720 will normally give you the best interest rates because there is really no benefit to scoring higher as long as you are above the median.

How to Improve Your Credit Score

If your credit score is not that great, there are some things that you can do to help raise it over time.

  • Pay your bills as scheduled.
  • Get different types of loans.
  • Do not have too many inactive credit cards.
  • Do not reach your maximum credit line.
  • Avoid additional debts that you can’t pay off on time.

How can you know what your credit score is?

There are several websites available that can provide you with your credit score. The three major ones are the Experian, TransUnion, and Equifax. They will provide you a free annual statement of your credit score. The final score is actually an average of all three.

A good credit score greatly affects your financial credibility. If you have higher credit score, lenders will be more likely to let you borrow the money that you are requesting. If you fall too far behind on paying your debts, it can be very easy to drop your score and relatively hard to raise it. Therefore, it is important for you to avoid financial stupidity and not accumulate more debt than you are actually able to pay.



One Response to “What Is Considered A Good Credit Score?”

  1. comment number 1 by: how to improve credit score

    anybody recommend any good sub-prime cards that are goood to use obviously through experience? Thanks in advance…

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