When it comes to credit scores, FICO scores are the ones most often used by lenders. They are used in 90% of financing decisions. However, this is not the only score you have. Different credit bureaus, lenders, and credit officers have their scoring models. The ranges for these scores, and what is considered a good credit score, vary depending on the credit score used.
The second most common credit score is called the VantageScore. It is the scoring model used by credit bureaus. In this article, we will give you ranges for FICO and VantageScore, so that you have the most complete information possible. For other score ranges, see the information for that specific score provider.
What is the highest credit score? What is the lowest
FICO scores range from 300 to 850. It is very rare to have the highest or the lowest credit score; almost everyone will find themselves somewhere in the middle.
For VantageScore, two models have been used. The previous model ranged from 501 to 990. However, the VantageScore 3.0 used today matches FICO. It ranges from 300 at its lowest point to 850 at the highest point.
What is prime credit?
For loan purposes, you will want a rating that is either prime or super-prime. Any lower term means you are considered a subprime borrower. As a result, you will pay higher rates and may not be approved for traditional financing. Subprime loans are riskier because borrowers are more likely to default. As a result, the loan products they can access cost more and have stricter terms.
For example, adjustable-rate mortgages (ARMs) are a tool that makes it easier to qualify for a mortgage. However, ARMs were a major contributor to the 2008 mortgage crisis. When the real estate market took a turn for the worse, the rates on these loans skyrocketed and loan values fell. Millions of subprime borrowers ended up with loans they couldn’t pay, and houses they couldn’t sell.
If you have a high-risk rating, it does not mean that you should avoid credit and loans altogether. However, you should always pay attention, to ensure that you can pay the loan, despite any changes that may occur in the general economy, and your own.
What credit score do I need to buy a home?
In general, you need a credit score above 620 to qualify for a traditional fixed-rate mortgage at a good interest rate. To qualify for an ARM, you will generally need at least 600.
However, there are programs available that help first-time homebuyers overcome the challenges of low credit. With financing through the Federal Housing Authority (FHA), you may qualify for financing with a score as low as 560.
You will pay higher interest rates than on a mortgage, which equates to many thousands more paid over the life of the loan. Always consider the total cost and the monthly cost carefully, before taking out a loan.
What credit score do I need to buy a car?
Car loans are quite flexible as financing progresses. You can find auto loans for a bad credit rating, which allow you to finance with a score as low as 500. However, these loans can be very risky and the rates can be extremely high. Sometimes your rate can be so high that you barely pay the principal as you make payments. Your payments will hardly make a dent in the principal or principal of the debt, which will remain with a little downward variation.
In general, you want to have a score of at least 600. For a new car, we recommend scoring above 661, so you will be in the price range. For used cars, close to the prime score is generally acceptable, so that would be just over 600.
What is a good credit score to lease with the option to purchase?
The leasing generally follows the same score ranges to buy. A lease is effectively like a loan, so the lender will still want to assess your creditworthiness. In general, you will want to get a maximum grade or a good grade for a good rate, any amount that is greater than 660. However, any amount greater than 600 might be sufficient.
What credit score do I need for a credit card?
Credit cards are also generally flexible when it comes to qualifying for one. There are cards available to people who have bad credit. These secured credit cards are designed to help you build credit if your score is below 500. You make a cash deposit to open the account and get a line of credit equal to your deposit. You can open these accounts even with a score of 400 or less.
In the case of traditional unsecured credit cards, it will generally be necessary to have a score higher than 600. If your score is higher than 700, you can generally qualify for any card you want. However, to get those great advertised credit card offers, you need a score of 720 or higher. Only great credit scores enjoy the best credit cards with the lowest rates.
It’s also worth noting that you should call periodically to renegotiate interest rates when your credit score improves. You don’t technically refinance credit card debt. Instead, you generally just ask for an interest rate reduction. Every time your score improves significantly, call your creditors to negotiate lower interest rates.