Credit scores range from 300 all the way up to 850 and where you fall within that scale affects a variety of credit decisions. From loan approval to interest rates, lenders and credit card companies alike use your credit score to determine your creditworthiness. Even some employers and landlords require a credit check before hiring or taking on new tenants. But what exactly is a good credit score? Read on to find out.
Credit Score Categories
Many lenders use the following guide to categorize potential borrowers.
- Excellent Credit: 781 – 850
- Good Credit: 661 – 780
- Fair Credit: 601 – 660
- Poor Credit: 501 – 600
- Bad Credit: Below 500
Of course, your credit score isn’t the only factor lenders consider when looking at your loan application. Likewise, there is not necessarily a hard cut-off for each category. Even if you fall into one of the lower tiers, there are still a number of options available to you for both personal loans and larger loans like mortgages. Many government-backed mortgage programs require a minimum of just 580, while some personal lenders will qualify borrowers with credit scores as low as 600.
What to Do with a Low Credit Score
If you still can’t get approved for the funds you need based on your credit score, there are other options such as payday loans, title loans or short-term installment loans. These loans offer small amounts of funds over a short period of time for borrowers with poor or no credit. And remember, even if your credit score is low today, both time and sound financial decisions can put you on an upward trajectory. Even if you don’t need a loan today, find out your credit score and, if necessary, work to improve it so that you are prepared for the next time you might need a loan.