Your credit score determines your eligibility to take out loans and the amount of interest rates you would have to pay. Therefore, it is important to see which range your credit score falls in. The sample credit scoring system used is the FICO Score since it is the most adapted one. The range of the FICO score is between 300 and 850. The chart below explains what each score range means.
FICO Score Range
What It Means
720 - 850
Excellent credit score. You could get the lowest rates on everything. Certain lenders may offer you better rates or discounts if your score is over 720, 740, etc.
Note:Even if your credit score is in this range, it would mean nothing to the banks and lenders if you just established your credit profile (no credit history).
680 - 719
Good credit score. You are qualified for most loans and leases but the interest rates may be a bit higher than borrowers with excellent credit scores. You can be rejected from certain types of financing, such as an A-paper mortgage loan or the lowest auto insurance premium.
620 - 679
OK credit score. When you get a loan, lease, or mortgage, there would be more restrictions and fewer approvals. Most likely, you would not receive the lowest interest rates and thus would lose money.
Tip:It would be smart to assess your score and improve it.
580 - 619
Bad credit score. Your credit score is below average and is considered subprime. You would have a difficult time getting a loan or credit card. If you do get a loan, the interest rate would be relatively high.
Tip:Definitely evaluate and improve your score.
500 - 579
Terrible credit score. You can get a loan but you have to pay high interest rates. At this stage, you are likely to make credit mistakes that would negatively impact your life.
Tip:Immediately evaluate and improve your score.
300 - 499
Worst credit score. You should consider speaking to a professional because your credit report probably has very little positive data. You still have a little chance of getting a loan, but the terms would be extremely brutal.
Tip:Start educating yourself and improve your credit score right now.
Other credit scoring systems may have different numeric ranges from the FICO Score (for example, a more intuitive range of VantageScore), but the general pattern remains the same. If your credit score is high (if it is closer to the highest number of the range), then you can actually save money by acquiring low interest rates. On the other hand, if your credit score is low (if it is closer to the lowest number of the range), then you would have to pay a very high interest. To give you an idea of how much people (on average) in each credit score range pay, please see the chart below (source: FICO).
From the table above, it is evident that the larger the number of your credit score, the more money you save. You can calculate how much money you can save with a good credit score by yourself.
According to the national statistics, the range of the FICO Score with the highest population percentage is 750-799. Below is a chart that illustrates the national statistics for all credit score ranges. It can be seen that 58% (nearly 60%) of the population has a score higher than 700. A score below this range is likely to wipe out many financial benefits one could have possibly received otherwise.
