Credit Score Scale: What are credit score ranges?

Just about every major financial decision you make is linked to your credit score.

FICO score is a three digit number that determines the interest rate you will pay on your credit cards, car loans, and home mortgage, as well as whether you will be able to get approved for apartment rental or cell phone.

FICO stands for Fair Isaac Corporation, the company that invented the formula that rules the world of consumer credit.

If you have a high score, it means you have a great reputation with the business world and you’ll get the best deals on credit cards, loans, mortgages, etc. A lower score translates into paying higher interest rates and less advantageous payment terms on cards and loans. Your credit history can even affect your auto insurance premiums.

Your FICO score is based on your sending and bill paying habits, and your overall debt load. Everybody you do business with – lenders, credit card companies, phone operators – regularly file reports on your financial activity to one of the three major credit bureaus. Like a big brother – the credit bureaus know what you have spent, what you owe, and whether or not you pay your bills on time. From all that data, the credit bureaus calculate your credit score using a formula developed by Fair Isaac.

Credit score can range from 300 to 850. Your goal should be to get your score into 720-850 range. The good news is that a buyer with a FICO score of 722 can get just as good an interest rate on an auto loan as someone with 848. That’s true for every credit score range.

The credit score ranges are as follows:

• 720 and above is Prime Credit
• 680 to 719 is Good Credit
• 640 to 679 is Marginal Credit
• 600 to 639 is Sub-Prime Credit
• 580 to 599 is Poor Credit
• 525 to 579 is Bad Credit
• 480 to 524 is Very Bad Credit