What Is Considered A Good Credit Score?
Credit scores are three numbers that can have a big impact on any financial decision you make. But what is considered a good score?
How does your credit score stack up? Most credit scores range from 300 to 850, so there is certainly a lot of variety out there. What is considered bad? Good? Excellent? Is there even a consensus?
How Is Your Score Determined
A credit score is calculated based on your credit history and recent credit activity. It includes a lot of different things outside of your credit card activity. Credit scores take loans into account as well as any kind of financial transactions in your name.
Instead of sending a creditor your entire credit history when you are looking to take out a loan or open a credit card, credit bureaus have simplified it by rating your credit history from 300 to 850. This simplification makes it easier for creditors but removes the detail from a credit review, which can be negative for individuals.
What Is a Good Credit Score?
What is considered a ‘good’ credit score changes depending on the credit bureau you are dealing with. According to Equifax a good credit score is 670-739. Anything above that is considered very good or excellent, while anything below that is considered fair or poor. On other scales a good score is between 700 and 750 with everything over being excellent.
So in general, if your credit score is around 700 you have a good credit score.
If you want to get a mortgage or take out another big loan you need to make sure that your credit score is at least in the ‘good’ range to get approval and not drown in interest charges. Whenever you are about to make a big financial move you want to take steps to make sure your score is as high as possible.
What Is The Average Score?
If your credit score is not in the good range just yet don’t worry! There is a lot you can do and you certainly are not alone. In the United States the average credit score is 697 – firmly in the good range.
The average score state-to-state has a lot of variability with Mississippi having the lowest average score at 662 (fair) and Minnesota having the highest 724 (good).
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