Your credit score affects a number of facets of your life, including whether you apply for a credit card or a loan, the interest rate you pay, and occasionally, whether you obtain the apartment you desire.
A higher credit score may allow you to get more credit benefits at lower interest rates. Borrowers with good credit sometimes have numerous options, including the opportunity to qualify for 0% vehicle financing and credit cards with 0% initial interest rates.
But what if your credit score is poor? In such cases, traditional loans and credit cards may not be available to you because banks have set standards for who is eligible to borrow money. So, if you have a bad credit score, you might want to look for lenders to get loans for bad credit.
What Is a Credit Score?
A credit score is a three-digit number that typically ranges from 300 to 850 and indicates how likely you are to repay loans and make payments on time. Your credit account information is used to compute your credit score.
Your credit score indicates to a bank or lender whether you are a creditworthy borrower or not. Credit-reporting organizations, commonly known as credit bureaus, compile information about your credit accounts to create your credit reports.
A bad credit score can significantly impact your financial status. It can lead to a financial crisis when you need quick access to money. However, securing an emergency loan may seem unattainable if you also have low credit. Fortunately, you can go to CocoLoan and get immediate assistance from professionals for bad credit.
The Credit Score Range
Knowing your credit score isn’t enough. To reap the benefits of a credit score, one needs to be aware of the credit score range that qualifies a person for a loan from a financial institution. Credit ratings range from excellent to poor. They assist the lender in determining the interest rate you will pay and may even decide whether a loan is granted or denied.
A credit score of 700 or more is generally regarded as acceptable and may qualify a borrower for a reduced interest rate, resulting in less money paid in interest over the life of the loan. Scores of 800 or higher are considered exceptional. While each creditor establishes its own credit score range, the average FICO score range is commonly employed.
- Excellent: 800 to 850
- Very Good: 740 to 799
- Good: 670 to 739
- Fair: 580 to 669
- Poor: 300 to 579
Exceptional Credit Score: 800 to 850
Customers with credit scores in the 800–850 range are seen as constantly responsible and have a long history of on-time payments and minimal credit card balances. Due to their perceived low default risk, consumers with great credit may qualify for cheaper interest rates on mortgages, credit cards, loans, and lines of credit.
A Very Good Credit Score: 740 to 799
A consumer who has a credit score of between 740 and 799 is likely to be generally prudent with money and credit. They pay the majority of their bills on time, including those for loans, credit cards, utilities, and rent.
Good Credit Score: 670 to 739
Borrowers with credit scores of between 670 and 739 are slightly above the national average. Even though their interest rates may still be competitive, they are not likely to be as favorable as those in the two higher groups, and it might be more difficult for them to get approved for some types of credit.
Fair Credit Score: 580 to 669
Credit ratings between 580 and 669 are considered “fair” for borrowers. Lenders are still likely to offer them credit, but not at desirable terms.
Poor Credit Score: Under 580
A person with a credit score of between 300 and 579 has a credit history that is severely harmed. There is less likelihood for borrowers with credit ratings at this level to be approved for new credit. A poor credit score has the practical effect of limiting or eliminating your access to mainstream finance since lenders use your credit score as the single criterion for judging your ability to repay the money you borrow.
Your credit score is one statistic that can significantly impact your lifelong financial costs and savings. With a great credit score, you can get reduced interest rates, which means you will pay less for every line of credit you take up. However, it is up to you, the borrower, to ensure that your credit remains solid so that you can access more borrowing possibilities if necessary.