Your Credit Score Range and How Lenders See It

When talking about credit score, one of the most important topics is of credit score range. Credit bureaus collect the information about your credit transactions and give you points based on your actions. When you make your payments on time and manage your credits well, you are given positive points. When you miss payments or take too many loans, you get negative points. Your upward and downward movement on the credit score puts you in different ranges. Every lender will deal with you based on the credit score range you are in. Let’s see the different ranges and how lenders see them.

The ranges you will be seeing are based on FICO score, which happens to be the most and reliable credit scoring model in the country.

What Your Credit Score Range Tells Your Lender

Very Poor (350 – 579)

The name given to this range is “very poor” because it shows that you have been having an extremely hard time managing your debts. You have taken credits over and over and failed to repay them. Missing just one or a couple of payments cannot bring you in this category. When you are in this range, it is the sign of a big problem. You must delay or miss your repayment of the debt several times to fall into this range. Perhaps, you might have even filed bankruptcy in the past.

You can already figure out what the lenders would think when they see this credit score range. They do not think of you as a creditworthy individual and in most cases, you will be denied the loan altogether. No amount of convincing will work for you in this situation. In fact, this credit score range is what many companies take advantage of. They talk about financing you with even poor credit score and get you into a trap that you can’t get out of.

Fair (580 – 669)

You can be thankful to those behind this scoring model for calling this range “fair”. They could have just called it “poor” without the “very” part if they wanted to. However, this is a fair range and your case when you go for a loan is still considerable. You will get mixed responses from the lenders with this credit score range. Some creditors will completely deny any kind of help. They will reject your application for loan. On the other hand, some lenders will take a good look at your credit history to know what you have been doing in the recent times.

They will ask you a lot of questions. The best thing you can do with this credit score range is to improve a few things before you go to the lender. Make your payments on time, open a new line or credit which is easy to manage and manage it properly. If the recent entries on your credit history are positive, the lender will consider them and see you as a person who has realized his/her fault and wants to improve. However, the chances of getting approved are still pretty low.

Good (670 – 739)

That’s where things start to get better. It should not be less than a surprise if a lender rejects your application for loan approval while seeing you in this range. Any application you submit with this credit score range is worthy of being considered. This might also be a sign of you being a young person whose credit history has just started. Once again, a few nice entries in your credit history can be a great plus for you if you are in the good range. You will not get the best perks and interest rates when you apply for a loan but you will not feel that heat that those in the “very poor” and “fair” category feel. You can say that you are just in the safe spot here.

Very Good (740 – 799)

This is a healthy credit score and sign of a person who has been doing great with his/her finances. You have to do things right to get in this range because you are much lower than this when your credit history just starts. This is a credit score range that you can be proud of and it should also give you all the confidence you need when negotiating your loan with the lender. No lender will have any problems in forwarding you the loan. At this point, you might even get some benefit of the doubt if your recent credit history shows some hiccups. You will get enough opportunity to explain why the recent mishaps took place and the lender will be more than willing to trust you.

Exceptional (800 – 850)

This credit score range is the result of flawless financial performance. You can’t get better than this. You have no blotches on your credit score, and this is a point where your lender will not blink an eye before approving your loan. This credit score range shows that you have hit the mark with all the components that make up the credit score. You have a long credit history, you have a variety of credits on your reports, and you are not consuming all the credit that is available to you. It is quite an achievement and you should definitely be proud of it. According to the recent statistics, only about 20% of the Americans are in this credit score range.

Bottom Line

Now you know what credit score range really means and how you can use it to your advantage when taking to a lender. Having a poor credit score can get you in all sorts of financial troubles. You can’t buy a house on credit or get credit cards from the banks. Everything that you can’t buy on cash will become inaccessible for you. This is why it is highly recommended that you pay attention to your credit rating right from day one. Your goal should be to land in the “exceptional” credit score range. Treat the “very good” range as the bottom of the credit score because a slight slip-up when you are in the “good” range can throw you into the “fair” range. Fair is a nice way of saying poor in this particular instance.