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So what is considered a good credit score now? What was considered a good credit score before has changed since the credit crisis, and with countless foreclosures and bankruptcies being reported in record numbers what is considered a good FICO rating has been impacted. Let's take a look at what lenders now consider a good rating.
A high FICO from the three reporting bureaus has many benefits. You will find yourself able to qualify for lower interest higher reward credit cards with high balances. Lenders and creditors will continually be knocking on your door asking for the privilege to loan you money for business ventures or investments. Not only financing is rewarded by having a good credit score, insurance rates are reduced by as much as 25% in some cases and employers review your credit rating.
The three reporting bureaus, Experian, Equifax, and TransUnion all use a similar algorithm that determines your credit rating that takes into consideration of a number of factors. It is a secret the exact details of the formula they use but they generally report similar ratings.
Credit scores commonly range between 300 points to 850 points. The average credit score in the US currently stands around 725 for the average consumer. But a good credit rating is not determined by the bureaus so much as by market forces and ultimately your individual lender.
Bad credit has become more common than ever, and lenders have tightened their financing belt strings after the credit crunch, raising the standard of what is considered a good credit score to roughly 700 points and higher. If you are near or higher than this credit rating you will find yourself qualifying for better rates and fee structures when borrowing money than you otherwise would have.
If you find yourself below this rating, let us say with a score of 680 or below, you can consider yourself as having bad credit for the time being. A bad credit score simply means you will encounter more difficulty in getting approved for financing, or that the loans and credit lines you are considering will have additional fees.
Do not worry, if you find you do not have a good credit score any longer, as the credit crunch eases, lenders again will be forced to readjust their lending requirements as they compete and search for new borrowers of their products. The qualification FICO will drop and you will again qualify for these loan programs.
This puts borrowers of both credit types, bad and good credit, in a good positions, because if you work to improve your credit score now, you will benefit from when the market turns. Now that you have found out what is a good credit score, work to improve yours and you will find yourself in an elite community that is being offered even more benefits and rewards than ever before.