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Credit Score Ranges Explained

Your credit score is a three-digit number that reflects your history of borrowing and repaying money, and it plays a significant role in determining whether you qualify for loans or credit cards and at what interest rates. Lenders use credit scores to assess the level of risk they take on when lending money to you.

Understanding FICO Score Ranges​

FICO scores are the most commonly used credit scores, and they range from 300 to 850. Here's a breakdown of the different FICO score ranges:

Excellent Credit Scores (750-850)​

  • You have an excellent payment history with no missed payments or collections.
  • Your credit utilization ratio is low, indicating that you use only a small percentage of your available credit.
  • You've had credit accounts open for several years, showing stability and responsibility.

Good Credit Scores (700-749)​

  • You have a good payment history, but may have missed one or two payments in the past.
  • Your credit utilization ratio is moderate, indicating that you use some of your available credit, but not excessively.
  • You've had credit accounts open for several years, showing stability and responsibility.

Fair Credit Scores (600-699)​

  • You have a fair payment history, with potential late payments or collections.
  • Your credit utilization ratio is higher than ideal, indicating that you may be overusing your available credit.
  • You've had credit accounts open for several years, but may not have used them consistently.

Poor Credit Scores (500-599)​

  • You have a poor payment history, with frequent missed payments or collections.
  • Your credit utilization ratio is very high, indicating that you're struggling to manage your debt.
  • You may have recently opened new credit accounts or closed old ones, indicating inconsistent borrowing habits.

Bad Credit Scores (300-499)​

  • You have a bad payment history, with many missed payments, collections, and potential bankruptcies.
  • Your credit utilization ratio is extremely high, indicating that you're significantly overusing your available credit.
  • You may have recently experienced financial difficulties or had credit accounts closed due to non-payment.

Why Credit Score Ranges Matter​

Credit score ranges matter because they determine the interest rates you'll qualify for and whether you'll be approved for loans or credit cards. Generally, lenders consider borrowers with excellent credit scores (750-850) to be low-risk, while those with poor credit scores (500-599) are considered high-risk. As a result, people with good credit scores often enjoy lower interest rates, better loan terms, and easier access to credit.

How to Improve Your Credit Score​

Improving your credit score requires a long-term commitment to managing your debt and demonstrating responsible borrowing habits. Here are some tips to help you improve your credit score:

  • Make on-time payments for all bills and loans.
  • Keep your credit utilization ratio low, ideally below 30%.
  • Monitor your credit reports for errors or inconsistencies.
  • Avoid opening new credit accounts unless necessary.
  • Build a long credit history by keeping old accounts open.