- Kristine Wood
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This question is highly subjective and largely depends on what you’re trying to do. However, there are a few parameters credit reporting agencies and lenders use to categorize credit scores. Most lenders use your FICO score when considering loan applications. The lowest FICO score is 300 and the highest is 850. The higher your score, the likelier you are to get approved for financing, and the better interest rates you’ll receive. Read on to find out more about how credit scores are evaluated and find out where you fall.
Good Credit Scores
While most people don’t have a near-perfect score in the 800s, lenders consider a relatively broad range to be above average, which is good news for consumers. The categories below reflect how most financial institutions view credit scores ranging from 601 through 850.
- Excellent Credit: 781 – 850
- Good Credit: 661 – 780
- Fair Credit: 601 – 660
Lenders look at many different factors when evaluating loan applications, so a good credit score alone won’t automatically ensure approval. Additionally, these numbers are just ranges and don’t guarantee a specific lender’s minimum scores. In fact, many lenders require a minimum of 640 for approval, which is at the upper level of the Fair
Below Average Scores
Below average scores typically fall into the following categories:
- Poor Credit: 501 – 600
- Bad Credit: Below 500
However, even if your score is below the numbers listed above there are still plenty of loan options available. In fact, to get an FHA home loan, you only need a 580 credit score. Payday loans are another viable option since lenders typically don’t look at your full credit report during the approval process.
It’s also important to remember that credit scores are constantly changing and that there are several things you can do to improve yours. Paying your bills on time and reducing the amount of debt you owe are two of the fastest ways to increase your score so that you can achieve your financial goals.