Credit Score determines your creditworthiness. A FICO score ranges from 300 to 850 and the median is 723. However, what score guarantees you a great interest/deal on loan or mortgage or other forms of credit? A good credit score does. But what exactly would be a good score then?
A good credit score range is 700 to 850. So, if you have a score between 700 and 749, your loan applications would probably get approved but you might not get the best terms (e.g. interest rates, amount etc.). However, here it is important to remember that each lender or lending institutions have their own guidelines and benchmarks which they use for calculating a credit deal for you.
Excellent credit scores lie between 750 and 850. With such scores, you can be sure of getting not just quick approvals for your loans but also better terms. And a score of 850 qualifies as the best credit score.
As is obvious, maintaining a score of 800 to 850 is very difficult but if you can pull yourself to that much desirable number, you can be sure of getting the best terms on all your loans. Not only that, no matter which form of credit you are looking for, with best credit score you will be offered credit without a glitch.
A good credit score can help especially if you are planning a long term loan like a mortgage loan. This is because even a slightly favorable interest rate or loan amount can make a big difference over a period of time. Then what is a good credit score to buy a house?
A score of 720 and above is a good credit score to buy a house. You can get lucky with low interest rates and get a decent mortgage loan. However, if you’re just there but not exactly at 720, you still have options to improve it by making timely payments and by getting rid of your debts (or reducing balances on your credit accounts).
So, if your score doesn’t fall between good to excellent range and if you can wait for some more time before buying your home… you can want to work towards improving your credit score in order to get the best deal on mortgages.
Car loans are equally tedious if your score is out of the good to excellent range. So, what is a good credit score to buy a car (through car loan)? For most lenders, it would be between 620 and 700. But most of the times it depends on the lender. The average credit score for getting a car loan at decent loan terms is between 620 and 650. However, a host of lenders offer you loans for scores that are much lower than this range.
So, you can get a car loan even with low scores. But at low scores you may have to compromise in the form of less attractive terms and conditions like higher down payment, higher interest rates etc.
Like in the case of home, you can first look to fix your credit scores and then go for a car loan. Not only will it help you get better interest rates, lower down payment etc., but save you from the vicious circle of bad score if you are unable to pay your installments on time or miss them altogether.
Here it is worth mentioning that credit score is also used by some employers as a measure of responsible behavior… and such credit report/score verification is part of their recruitment process.
So, a good credit score helps you in several different ways… and maintaining a good credit score can provide a lot of advantages to you.