Credit Score Range and Scale: When consumers know where they stand on the credit score scale, they are in a better position to determine what type of credit in which they can apply. Lenders offer the best credit deals to the most creditworthy consumers. Consumers must first have a clear understanding of the credit score range or credit score scale before they can have a clear picture of where they stand.
What Is the Range of Credit Scores?
Lenders have 4 basic credit score ranges in which they use to classify consumers. Consumers can determine their credit options by determining where they fall in the range of credit scores. The range of credit scores are as follows:
720 and above – This is the credit score range that most consumers want to be in when applying for credit. A credit score of at least 720 is what is necessary to receive the best interest rates and other options available from credit lenders. A 720 credit score is high enough for consumers to receive a 0% interest rate on the purchase of a new home. Borrowers can also benefit from their high credit score when the time comes to purchase a home or to receive a credit card. Lenders will offer interest rates in the single digits to the consumers with the best credit scores.
675 to 719 – This credit range is not as desirable as the 720 and above range, but consumers will not likely be turned down for credit with good payment history. The consumers who fall in this credit range may have a few late payments on their record and high credit balances on their revolving debts. They are not a huge credit risk, but because of their stretched credit situation, lenders may offer loans at higher interest rates to them. These consumers may be as reliable at repaying their debts as those in the 720 and above range.
620 to 674 – This credit range is a little risky for lending. Those in the 620 to 674 credit range have noticeable blemishes on their credit. The consumers that fall in this range may have late payments and credit cards that are over the limit, and their credit may be extended to the max. Lenders have a certain debt to income ratio that they look for to consider consumers for credit. Lenders may offer double digit interest rates to consumers in this credit range. The payment history of lenders may be the biggest indicator in whether a consumer will qualify for a loan.
619 and below – This is the credit score that no one wants to be in when it comes to receiving a loan. Lenders are not as likely to lend money to these consumers because of the extremely high risk of default. The lenders that fall in this category are likely to have major credit issues that include liens, bankruptcies, charge offs, late payments and other negative credit information. Consumers will pay high interest rates—if they qualify for a loan at all.
When consumers know what credit score range in which they fall, they can prepare for the future credit that they want to receive. Lenders want to know that their credit customers are capable of managing the credit in which they receive.