Are you uncertain about your credit rating? Here is an ultimate guide on the credit score ranges in the US. Learn more.
What exactly is a credit score, and what does a good credit score entail? Suppose you’ve ever tried to buy a big-ticket item, like a home or a vehicle. In that case, the finance company will almost certainly have inquired about your credit score.
This is one of the most critical aspects that lenders assess when deciding whether or not to provide you with a loan.
Credit scores are used by credit card issuers, insurance companies, and lenders to calculate loan amounts and interest rates. Your credit score is determined by your credit history and may significantly impact the amount you pay.
Ranges of Credit Scores in the US
The range of credit scores is 300 to 850. FICO® and VantageScore score range both utilize 300 to 850. However, VantageScore used to use a 501 to 990 range.
850 is the most significant credit score.
The average credit score ranges in the US
The average FICO Score in the United States is 711, while the average VantageScore is 688.
A credit score of 680 or above is regarded as suitable, while a score of 740 or more is considered exceptional. What, on the other hand, is an average credit score?
This question may be tough to answer. Every expert, credit bureau, and a loan officer has a different take on where the line between good and bad credit should be drawn. Your credit score may be low by one lender but acceptable by another.
Furthermore, the adjective “good” is a subjective one. Is “good” synonymous with “great” or “good enough”? Comparing your score to national averages is an excellent place to start. The following percentage of customers have scored in the following credit score ranges in the US, according to the Fair Isaac Corporation (FICO), which was initially launched in 1989:
In the credit market, FICO isn’t the only scoring model employed. Credit ratings come in a variety of shapes and sizes. The other critical scoring model is VantageScore®, which is currently in its third iteration known as VantageScore 3.0.
What is the limit of a bad credit score?
Having a bad credit score ranges from 300 to 549 points. It is widely understood that credit ratings of less than 550 will always result in credit denial. If your score is in this area, you’ll need to put in some effort to raise it.
A bankruptcy filing might lower a credit score to this level. Borrowers with poor credit ratings are overdue around 75% of the time, according to statistics. However, if you continue to make on-time payments, your credit score should increase. Specific forms of loans, such as house loans, are challenging to get with a score in this area, but there are still mortgage possibilities for those with low credit.
What is the reach of a poor credit score?
A poor credit score in the US ranges from 550 to 619. Due to their high credit risk, credit agencies classify customers with credit delinquencies, account denials, and minimal credit history as subprime borrowers. Although credit may be obtained, it is sometimes on highly unfavorable terms, with substantially higher interest rates and penalty costs.
Suppose your credit score is in this area. In that case, you should start addressing any particular credit issues you may have before asking for credit. Subprime borrowers fall behind on their payments 50% of the time.
Fair Credit Score Ranges
620-679 is a fair credit score. Individuals with credit ratings of 620 or above are seen as less risky. They are more likely to be accepted for credit.
Consumers become prime borrowers in the mid-600s. This implies individuals may be eligible for more significant loan amounts, greater credit limits, smaller down payments, and outstanding loan and credit card conditions negotiation power. In this range, only 15-30% of borrowers go overdue.
What is the range of a good credit score?
In the US, anything that ranges from 680–739 is a good credit score. A credit score of 700 is considered the “good” credit level. This FICO score range is familiar to lenders, making a choice to offer credit much simpler. Borrowers in this bracket are usually always accepted for loans and have lower interest rates. If you have a credit score of 680 and it’s improving, you’re on the right road.
The median credit score in the United States, according to FICO, is in this area, at 723. Only 5% of borrowers with this “excellent” credit score fall behind on their payments.
What is the range of An Excellent credit score?
Excellent credit score ranges in the US starts from 740 to 850. Anything in the mid-700s and above is considered outstanding credit. It will result in quick credit approvals and the lowest possible interest rates. The incidence of delinquency among consumers with excellent credit ratings is about 2%.
Extra points don’t make a significant difference in your loan conditions at this level of credit rating. A credit score of 760 is considered equivalent to an 800 by most lenders. On the other hand, a higher score might act as a buffer if there are any unfavorable events in your report. For example, if you max out a credit card (resulting in a 30-50 point loss), the ensuing damage will not knock you down a tier.
Factors that Influence Credit Score
While each credit scoring methodology is unique, a few similar characteristics influence your credit score. These elements include:
- Payment history
- Using credit limits
- Active credit card balances
- Credit queries
- Credit available
- Amount of accounts
In a credit score, each aspect gets its own weight. It’s critical to remain on top of your payments, use your authorized credit, and limit queries if you want to maintain your credit score on the upper end of the spectrum.
Suppose you’re looking to buy a home or take out a loan. In that case, there’s a 45-day grace period during which all credit inquiries are treated as a single cumulative inquiry. To put it another way, if you go to two or three lenders in 45 days to discover the best rate and conditions for a loan, it only counts as one inquiry. This implies they won’t all be counted against you and won’t impact your credit score.
Why does my credit score seem to be so low?
With the current credit score ranges in the US, your rating may seem too low. Late payments, bankruptcy, and other harmful entries on a consumer’s credit history aren’t necessarily the cause of lower credit ratings. A poor credit score may also be caused by a lack of credit history.
Even if you have created credit in the past, things on your credit report may ‘slip off’ if no action has been taken for a lengthy period. Credit ratings must have had some form of action reported by a creditor within the last six months. Suppose a creditor stops updating an old account that you no longer use. In that case, it will vanish from your credit report, leaving FICO and VantageScore with insufficient data to compute a score.
Similarly, individuals who are new to credit should be informed that FICO or VantageScore will not assess their credit history, resulting in a low score. Even if you haven’t made any errors, the credit bureaus still consider you a dangerous borrower since they don’t have enough information on you.
Enhance Your Ratings
“What can I do to improve my credit score?” is another typical question when it comes to credit scores. There are several techniques to raise your credit score to the upper echelon.
- Cleaning up your credit record is one of these techniques.
- Paying down your amount
- Making payments twice a month
- Increasing your credit limit
- Opening a new account
- Negotiating your outstanding balance
- Making timely payments
Consumers may use Credit.org to assist them in managing various payments. You may combine these payments into one single amount with a reduced interest rate if you use a Debt Management Plan. Contact one of our credit coaches now to learn more!
Of course, various lenders have different requirements, so your results may change. Even if you have a good credit score, a bad public record on your credit report might make it challenging to secure a loan. And, although credit score ranges in the US don’t include your income, lenders do. A lender will not accept you regardless of your credit score if they believe there are hazards, such as your incapacity to repay.
No matter where you fall on the scale, keep in mind that various things may both hurt and help you improve your credit score. If you’re having trouble paying off credit card debt, talk to one of our professional credit coaches about how they can help you pay it off quicker and improve your personal financial condition.