Before the economy took a turn for the worse and credit became harder to obtain, good credit and a good credit score was a fairly well established number or close range of numbers. Now when it comes to the topic of a good credit score, that well defined range of credit scores that creditors and consumers would agree on is elusive. Tougher credit and greater credit awareness has elevated those numbers and what was once a good number is now reduced to a fair or poor credit score.
A wide range of credit scores will still be good enough for most consumers to obtain a credit card or obtain a cell phone or avoid problems with an insurance contract but scores are certainly higher now for consumers that want to save money with lower interest rates as well as obtain access to credit when they need it.
Credit scores generally range between the low 300′s and the mid 800′s. In between these numbers, credit evaluators look for different ranges of credit risk. Credit scores are going to directly affect how much money an individual can borrow as well as how much it will cost and the low barrier to receive the best rate and terns has risen dramatically.
In 2002 a number of articles were written extolling the value of a credit score that was just above 600. Businessweek in Nov 25, 2002 wrote “…a credit score under 620, generally the cutoff for a prime-rate loan. “ The prime rate is the interest rate banks offer their most creditworthy customers. Bankrate.com in Dec. 2002 stated that “As a general rule, those with a score above 650 will receive the lowest interest rate loans.”
Jump ahead to June 2010 and one of the largest bank mortgage lenders in the U.S states in their mortgage marketing material that the mortgage rate will increase for all borrowers that have a credit score below 720. In fact the costs for the home loan increase for every 20 points the score drops below 720 to the point where a credit score under 620 is considered non-traditional.
A score of 600 is now clearly considered a bad credit score. A score above 720 is now normally considered a good credit risk, while a score under 660 is considered a high risk. More and more Americans are experiencing the consequences of low credit scores and bad credit first-hand as the standards for good credit has risen.
With the value of a good credit score rising it is becoming increasingly imperative that consumers evaluate their credit history and start fixing and improving their credit profile. For most consumers, working on a good credit score starts with obtaining a copy of their credit report to determine any weak spots in their credit history.
Improving or fixing a credit score often requires consumers to work on any erroneous information or outdated information in their credit report including items such as outstanding judgments, bad credit history items, and any other derogatory remarks in their credit record. It may also be prudent to work on building a good credit history going forward while fixing previous credit problems.