Credit Scores: Learn What They Mean

Credit Scores: Learn What They Mean

Credit Scores: Learn What They Mean

Ever wondered what all the possible combinations of credit scores really mean and what is considered the average score? Most think of a credit score being in the high 600's a pretty good score, but the truth is, that is considered average, and average is on the high end of being fair, which is not an excellent credit score.

To have an excellent credit score, your score would need to be above 800, which you may not hear of very often. It is called an excellent credit score because it is way above average, meaning that most of the population will not have a credit score this high. Anything between 750-800 is therefore considered a very good score, and anything between 700-750 is considered good. Between 650-700 is considered fair, with the average of being around 678. Between 600-650 is considered bad, and anything below 600 is considered very bad.

It is better to have no credit at all than bad credit. With no credit, lenders wonder if you will pay the required payment on time since they have no proof one way or another. But with bad credit, they will know you won't be responsible and therefore, they may not get all their money back, or at least not in a timely manner. Even if your credit is fair, you will want to do everything you can to boost up your credit since you won't get as good of a deal on interest rates with only fair credit. The better your credit scores, the less you will have to pay in interest since lenders use high interest as a way to protect themselves in case those who are more irresponsible (proof from their bad or fair credit score) run out of money and can no longer pay the remaining of what is owed to them.

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