Average credit score vs Good credit score

Your credit score is ultimately the main factor when considering you for credit or lending of any kind. In fact, lenders have become so dependent on credit scoring that they now make separate offers available to each credit score “bracket”. In other words, lenders will make unique terms and rates for consumers who fall into a credit score range. For example; if you have a 580-620 score, you qualify for “x” interest rate and “x” terms. If you have a 620-680 score, you qualify for “x” interest rate and “x” terms, and so on.

These terms and rates ultimately determine how much cash you have to pay each month for the item you want to finance. (e.g. car, house, boat, credit card, etc.) This means two people who purchase the same item, for the same purchase amount, can still pay different payments every month.

This is why a good credit score is so important. Not only does it determine whether you can get the item at all (qualify), but it also determines whether you can afford the payments even if you do qualify!

What is considered a “good” credit score?

When The Credit People start working on someone’s credit, one of the first things we share with them is their starting credit scores. Once we do, the first question we’re usually asked is if their score is a “good” score or not.

There is not a straight-forward answer to that question because it always depends. It’s subjective to their goals and the purpose the lenders are evaluating their credit for. In other words, if you’re trying to get approved for a book club card, a 610 credit score might be “good enough”. However, if you’re trying to get the best rate on a home loan, then 610 would not be a “good” score.

Many lenders use 720 as the minimum point for giving borrowers the best rates. Others also consider 620 as a minimum as well. Any borrower with a lower score is considered “subprime” and a higher risk to the lender.