What Is the Credit Rating Scale?


Quick Answer

The most commonly used credit scoring algorithm in the United States is the FICO scale, which produces scores ranging from 300 to 850, states NerdWallet. Lenders typically see 300 to 629 as bad credit, 630 to 689 as average, 690 to 719 as good, and 719 to 850 as excellent.

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What Is the Credit Rating Scale?
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Full Answer

Lenders often have differing standards for interpreting credit ratings, according to NerdWallet. A person's credit score often determines the type of credit cards for which he is eligible. Credit cards available to those with good credit may come with such perks as cash back, a low interest rate and sign-up bonuses. Those with poor or nonexistent credit may have to put down a cash deposit to receive a credit card. As the cardholder's credit rating improves or builds, he may become eligible for a card upgrade.

Credit ratings are also used to determine interest rates on loans, says NerdWallet. Landlords might check a potential renter's credit before deciding whether to offer him tenancy. It's also common for insurance companies to check a person's credit before determining premium prices.

A credit rating can be improved by keeping credit card balances no higher than 30 percent, according to Bankrate. Those who have multiple cards should pay off the smaller balances on cards. Leaving open old credit card accounts that have been completely paid off also helps to improve a credit rating.

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