What’s a good score? It’s the million dollar question. Lenders’ appetite for credit risk has softened sharply since the end of 2007, but consumers still need credit. So what credit scores are they going to need in order to be approved, and at the best rates and terms?
A “good” score is, frankly, any score that gets you approved with the best deal the lender or insurer has to offer. If that means you need FICO® 750 across all three credit reporting agencies, then that’s your score target. If you can convince a lender to approve you at great terms with FICO 690, then your score target changes and becomes easier to achieve.
[Related article: FICO Reveals Details on How Mortgage Delinquencies Affect FICO Scores]
There is no “one” score recognized by all lenders and insurance companies as good, great, average or terrible. That’s why you hear different targets from different people, from different industries.
Scores in the low- to mid-600s will still get you approved for most secured loans but not for most unsecured credit cards. Scores in the low-700s will get you approved for secured loans but won’t guarantee you the best rates. And even strong scores in the mid-700s might not get you approved for the best mortgage rates if you don’t have enough of a down payment.
Your best bet is to work to improve your scores to as high a number as possible. If your starting point is in the 500s, you’ve got your work cut out for you. If you’re in the mid-600s then you will have an easier time of it. If you’re in the 700s already then you only need a little tweak here and there (probably to your credit card debt). And those of you who are sporting 750s and above, well, you need to go on a maintenance strategy rather than an improvement strategy. You’re already there!!
[Related article: The Politics of the Credit Score]
John Ulzheimer – Credit scoring and credit reporting expert and author, John is the President of Consumer Education for Credit.com. Formerly with Equifax and Fair Isaac, John shares his unique insight of the inner workings of credit scoring models and the credit reporting industry on CreditBloggers.com.