Are You Aware of What Is Considered A Good Credit Score?

A good credit score can open doors for you in the area of receiving credit for purchases from a new coat to a multi million dollar home. In order to be in the best rating you need to know what is considered a good credit score. Many Americans to date do not know what their credit score is and may be able to save thousands of dollars a year by raising it in simple ways.

The whole concept of a credit score, also known as FICO score, can be a bit confusing. It ranges in a scale from three to nine hundred. Those who created the scale are a bit blurred on their definition of who actually creates the scoring system.

The FICO system is generated from Fair Isaac and the Consumer Federation of America. Other companies also play a part in the scoring system depending on where you receive scoring. The system is created by mathematical determinants and your way of paying your bills. They calculate your past history of bill payment, the current status of you bills, the amount of debt compared to what your existing credit level is and also how long you have been using credit.

The scoring may be confusing but what all the companies have in common is their standards for a good rating which is a score of 620 and above. This number is on the line of a good risk. It is not great but will pass for a good score. All numbers below this line are considered to have bad credit.

Scoring 640 and above puts you in the category of a pretty good score. You may want to raise this if you can but you are in good standing. All the numbers up to a 680 rating are good but to qualify for larger purchase you may need an even higher rating.

A score of 690 and above is considered to be a good enough rating to ease the mind of any underwriter in the mortgage business. A score below this may cause hesitation in their approval and delay a loan you want to get. Mortgage lenders fight hard to get their clients approved with a lower rating but it is a difficult process and the way the economy is going it is getting even more difficult.

If you have a credit score of 700 and above you are considered to be in the golden bracket of the scoring system. Here you have proven yourself to be an excellent risk in your tenure of using credit. You can assure that you have power to negotiate interest rates and secure loans with a rating of 700 and above.

Knowing what is considered a good credit score is the key in knowing your bargaining power regarding interest rates and securing high collateral loans such as a home or a car. More and more Americans are letting their rating drop because of lost jobs and a poor economy. But taking the steps to do everything in your power to keep your rating as high as possible will help you get through this short term financial drought and keep your good credit score when it begins to reign financially again.