There's a big benefit for your bank account, too: Your debt may be less expensive because lenders use your credit scores to set interest rates for loans. You also may qualify for higher credit limits on revolving credit accounts, such as credit cards and personal lines of credit.
Benefits of having an excellent credit scoreĪlthough there's no single number that guarantees a borrower access to new credit, excellent credit scores will generally give you an advantage when applying for new accounts. You can read “What Are the Different Ranges of Credit Scores?” for more detailed information about how credit scores are categorized. Poor (300 to 579): Borrowers with poor credit scores are considered very risky and are unlikely to be approved by a lender.As a result, lenders may be reluctant to offer new credit. Fair (580 to 669): Borrowers with credit scores in this range often have a history of poor credit behaviors.If approved, borrowers with good credit scores may face higher interest rates than less risky borrowers with higher credit scores. Good (670 to 739): Lenders may think twice before offering new credit to individuals in this range.Lenders are likely to approve borrowers in this range. Very good (740 to 799): Very good credit scores reflect frequent positive credit behaviors.As a result, individuals in this range may have an easier time being approved for new credit. Excellent (800 to 850): Lenders generally view these borrowers as less risky.However, most ranges are similar to the following: There are many different scoring models used to calculate your credit scores. Most credit scoring formulas sort credit scores into several groups, which are then ranked according to risk. Borrowers with excellent credit scores typically have the best chance of securing new credit at the most favorable terms. However, in most scoring models credit scores at the top of the range (generally 800 and above) are considered excellent. These individuals may be more likely to be approved for new credit. Higher credit scores tend to suggest a low-risk borrower with a history of positive credit behavior. Individuals with low scores may have difficulty getting approved by a lender or find themselves facing high-interest rates and other unfavorable terms. Lower credit scores tend to indicate a high-risk borrower who may have struggled with paying back credit in the past. Lenders have varying criteria for approving credit, but most borrowers think about credit scores in a similar way. They may also reference your credit scores when setting the interest rates and other terms for any credit they issue. Lenders consider your credit scores as one factor when deciding whether to offer you credit. Credit scores are generated based on the information recorded in your credit reports. What are credit scores and what range is considered excellent?Ĭredit scores are three-digit numbers, typically ranging between 300 and 850, designed to represent your credit risk, or the likelihood you will pay your bills on time. By establishing responsible financial habits - and practicing these habits consistently over time - excellent credit scores may be within your reach. If you're working toward excellent credit scores, you'll need to establish positive financial habits such as keeping up with debt payments and carefully monitoring your credit reports.Ĭredit scores in the excellent range are generally considered to be low-risk borrowers.Although there's no single number that guarantees a borrower access to new credit, credit scores in the excellent range may have an easier time securing a loan than borrowers with lower scores when applying for new accounts.Generally, credit scores of 800 and above are considered to be in the excellent range.
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