It can be intimidating to look at your credit score, as most people don’t know exactly what the three-digit number even means when they finally do get around to it. Credit scores are used for many important aspects of life, such as home-buying, taking out loans, and renting apartments. Higher scores translate to greater odds of getting loans with better interest rates or being accepted by a landlord to rent an apartment. Low credit scores may get turned down for loans, require a cosigner, have to pay higher interest, or put down collateral for loans.
Not sure what your credit score currently is? Get a credit check by Credit Sesame, and learn about the five credit score range categories below:
Scores in this range are on the lowest end of the spectrum, and around 16% of the population has a score within this range. It can be difficult to dig oneself out when scores are this low, but it is possible to correct past credit mistakes and raise one’s score substantially over time.
Typically, people in this range have missed several payments, have signed up for too many credit cards in quick succession, and or have otherwise proven that they may not be reliable at paying back loans. By checking your credit score regularly, making payments on time, and paying down loan balances, you can improve your score drastically within a few years.
About 17% of the population has a score within this category, and scores in this range have plenty of room for improvement. People who have almost no credit history combined with several late payments or outstanding loans tend to end up in this category, but all hope is not lost at this point.
The longer one has established credit, the higher a score tends to be, especially when loans are gradually getting paid off and one begins obtaining a heartier credit mix.
Those with good scores, about 21% of the population, may be able to secure loans at decent interest rates and are likely to be accepted for some apartments by landlords. Increasing one’s score from this point is much easier than the above two categories, but making a few credit mistakes can quickly set your score back into the fair or poor categories.
740-799: Very Good
People with very good credit scores usually have no problem securing loans at great interest rates and getting accepted into apartments within their budget. Around 1/4 of the population carries scores in this range, and it can set you up to have a much easier time with life’s changes, financially speaking.
Credit scores in this range demonstrate established credit, years of on-time payments, and very little risk for banks, lenders, or landlords. Lower interest rates on loans and mortgages can translate to several dollars in savings each month, which can quickly add up to thousands of dollars over the course of the loan. Credit scores in this range are a great goal for those who are looking to set themselves up for financial success.
It’s difficult to get one’s credit score into this range, but about 21% of the population has done just that. Banks and lenders are unlikely to hesitate to give you the best interest rates on loans available because people in his range pose almost no risk in terms of repayment.
Those who sit in this category also have decades of on-time payments, a wide variety of loan types, and use their credit responsibly nearly every month.
No matter which category you’re currently in, there is always room to change your credit score, for better or for worse. It’s helpful to regularly check your credit score with a trusted website or software and consult with experts about how to raise it if you need help.