In general, a score of 650 or above indicates a very good credit history. People with these scores will usually find the loan process quick and easy, and will have an excellent chance to obtain a loan at a relatively low interest rate.
Credit
Credit Score
A+
720 and Higher
A
700 - 719
A-
680 - 699
B+
660 - 679
B
640 - 659
C+
620 - 639
C
600 - 619
D - F
599 and Lower
620 to 650
Scores between 620 and 650 indicate basically good credit. (Average FICO scores fall into this range.) People with scores in this range have a good chance at a loan at a competitive rate, but may have to provide additional documentation and explanations to the lender before the loan is approved
Below 620
A score below 620 may prevent a borrower from getting the best interest rates, as they may be considered a greater credit risk - but it does not mean that mortgage funding can't be found.
The table above is typical of how lending institutions grade credit. Mortgage loans are generally easy at the B level or above. However some loans are approved with buyers in the 540 range. Even bankruptcy isn't as devastating to mortgage possibilities as it once was. FHA loans may be approval 2 years out of bankruptcy and even 1 year under extraordinary circumstances (medical, accident etc.)
We now know that five main financial factors are used to evaluate and calculate your credit score:
Your Payment History - Your record of paying credit bills in the past, number of adverse public records (i.e. bankruptcy, collections, liens), and the amount of delinquencies on your credit record account for about 35% of your credit score. This is the largest factor in your credit scoring.
Amount of Debt You Owe - The number of accounts you have open, the types of accounts, and the amount you have charged all combine to count as 30% of your risk score.
Length of Credit History - The amount of time that you've had credit and the specific length of time that you have had certain accounts make up 15% of your risk analysis.
New Credit - 10% of your risk analysis is calculated based on your recent credit activity. Your number of new accounts, recent inquiries, and efforts to re-establish troubled credit are grouped into this category.
Types of Credit in Use - The number of activity of credit accounts including credit cards, retail store accounts, and mortgages count for another 10% of your risk evaluation.
3 Major Credit Repositories
available for you to check your Credit Record:
Keep official credit inquiries to a minimum. That new credit card application, that 6-month same as cash furniture deal, and that new car loan all create the type of inquiries that cost your credit score about 4 points each. These types of inquiries count against you for 1 year from application. Inquiries that you make about your own credit do not count against you.
Too many credit card accounts (probably over 5) counts against you.
Using over 50% of any given credit line counts against you.
The longer your active credit history the better. Be careful about canceling that 15-year old credit card especially if it is your longest running account.
Avoid late payments (over 30 days). They count heavily against you at first, but over time their effect is minimized.
