What is a Good Credit Score?
In general, anything above 700 is considered a good credit score, but it’s not that simple. There are many different credit scoring systems with different scales — not to mention individual lenders have their own criteria. In short, a good credit score depends on the scoring system used and your particular lender. However, you can get a good idea of where you stand by getting your credit score and report.
If you don’t know your credit score yet, lets get them now before we continue.
| Score | Get from | Cost |
|---|---|---|
| FICO | MyFICO.com | $15.95 |
| TransUnion | Credit Karma | Free |
| Experian | Quizzle | Free |
| All 3 | CreditReport.com | Free with credit monitoring trial* |
* After accessing your credit score, you have to cancel the trial to avoid being charged for the service.
Credit Score Basics
In general, credit score is a number generated by a mathematical formula. This formula analyzes information in your credit report to derive your credit score — a number ranging from 300 to 850. Your credit score is a reflection of your credibility (credit worthiness).
Overall, your credit score does a very good job of predicting how likely you are to repay your debt. Therefore, lenders extensively use credit scores to determine whether or not to loan you the money and at what price (i.e., interest rate). Typically, people with higher credit scores get lower interest rates compared to the rates for people with lower credit score.
To give you an idea on how credit score affects interest rate, here’s an example of 30-year mortgage interest rate for a $300,000 loan from myFICO web site:
| FICO® score | APR | Monthly payment |
|---|---|---|
| 760-850 | 4.994% | $1,609 |
| 700-759 | 5.216% | $1,650 |
