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What Is an Excellent Credit Score?

Just a few years ago, credit seemed so easy to obtain. You’re credit score didn’t seem to be that relevant as almost anyone could get a loan. That mindset led people to believe that people with lower credit scores actually had good credit.

I remember a loan officer telling me just a few years ago that anyone with a credit score above 700 has excellent credit. Nowadays that definition has changed a bit.

So just what is an excellent credit score?

While there is no line in the sand that distinguishes a truly excellent credit score, many now consider 750 or above as excellent.

Your credit score or FICO score takes into account a multitude of factors in determining your credit worthiness. These scores can range from 300 (which is terrible) to 850 (sterling). Only about 10 percent of consumers are able to achieve a credit score above 800.

People with credit scores below 750 will still be able to obtain loans, but they will often have to pay higher rates. A credit score of 720 may have been excellent five years ago, but now it’s only considered “good”.

If you are looking for ways to boost to your credit score from good to excellent, here are three recommendations.

Lower balances – reduce the outstanding balances on your revolving lines of credit (e.g. credit cards). Having high balances in relation to your available credit limit will negatively impact your credit score.

Close accounts – having unused credit cards can end up hurting your credit score. Banks often consider your potential debt load when assessing your credit worthiness.

Stop asking – many people have their credit score reduced because they have too many credit checks in a short period of time. Every time you apply for a credit card (even a store credit card), you’re credit history in checked.

Filed in: Christian Finance, Debt & Credit, Stewardship

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