It is important to know each credit score tiers and where you fall on the range. This will identify if you will get approved for a loan or a credit card.
There are multiple credit bureaus that provide credit reports on which scores are based. Each bureau receives different information from lenders and that data is used to compile each report. Below is information on the different ranges of credit and how it could effect you!
Here’s a quick refresher on the credit score tiers!
300-579 – Very Poor
580-669 – Fair
670-739 – Good
740-799 – Very Good
800-850 – Excellent
When looking at your credit report, you will see three scores. One from each bureau, Transunion, Experian, and Equifax. Lenders take the middle of the three scores to help determine your interest rate on the mortgage. Quick rule of thumb: The higher your credit score, the lower interest rate will be. Each type of mortgage loan has different credit score requirements, and FHA is typically the most lenient. This is another reason why FHA loans are more attractive to first time homebuyers.
Payment history: It is important to pay your bills and debts on time because creditors prefer borrowers who pay on time, every time.
Amount owed: how much debt you owe to the amount of available credit. It is encouraged to keep your credit use to 30% of your credit limits.
Length of credit history: the older your accounts, the better
Credit mix: creditors like to see borrowers handle various types of credit
Recent applications: applying for credit cards or loans can result in hard hits on your credit score, which can lower your score.
Poor – 300 to Low 600s
You may not be able to get approved for a loan or credit card at all. If Lenders do approve you with a Poor credit score, you won’t be offered the best terms.
Fair to Good – Low 600s to mid 700s
You will most likely get approved by Lenders for credit cards or loans. You have the ability to shop around for better terms, but may still see high interest rates.
Very Good and Excellent – Above mid 700s
With a top credit score in this tier will more than likely get you approved with a great interest rate. You are still able to be denied with a high debt-to-income ratio. You will also see the most options in this tier for different products.
Take a look at our checklist to see the basic documents you’ll need to apply.