What is a Good Credit Score

By: Ryan

What is a good credit score?

Your credit score is an enormously important part of the credit approval process. Most likely it is the first thing that a lender looks at when judging whether or not to approve you for a loan, and it might be the last thing they look at. In fact, often times your application for a loan or credit card will not get as far as reaching a human being before being denied. Just by doing a quick background check with your Social Security number, and automated system will filter out applications to deny borrowers with a credit score that does not meet their minimum requirements.

So what are the minimum requirements? That depends. A perfect credit score is an 850 by the Fair Isaac Corp. - the leading credit score model. It is nearly impossible to have an 850 score, and you don't really need to bother on trying to get your score that high. Generally speaking, anything above a 770 will get you approved for the very best loan rates. And since you are approved for the best rates with a 770, chances are a higher credit score will not help you out any further.

While even a 730 is still deemed "excellent credit," according to E-Loan, the he median credit score in the United States is around 720. If you have a 720 or above you will still be able to receive favorable loan rates and should not have any trouble being approved for a loan.

Back to the original question, what is a good credit score . . . if you fall below a 620 credit score, you should be concerned. This tells creditors you are a risky borrower and there is a greater than average chance that you will not repay your debts in a timely matter.

In that case, a borrower with a 620 credit score will have harder time getting a loan for a car, mortgage or even a credit card In addition, rates will be higher in order to offset the risk to the lender.

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