FICO Score: What Is a Good Score?

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FICO Score: What Is a Good Score?

One of the first questions many people have about credit scoring is what score lenders consider “good”. There is, however, no single answer to that question.

Generally, of course, the higher the scores, the better. Each lender makes its own decision about where to draw the line, base on how much risk it wants to take and how much profit it thinks it can make with a given blend of customers. Many lenders don’t have a single cut off but may have many, with each segment qualifying for different rates and terms. Finally, as noted earlier, a credit score is usually only one factor in the lending decision. Although scores typically have a big influence, a lender might decide that other factors are more important.

You can see from this national distribution chart of FICO credit scores that most of the U.S. population has a FICO score of 700 or higher. Many lenders use 700 or 720 as the cutoff for giving borrowers their best rates and terms. Many also use 620 as a cut off point. Companies that deal with borrowers below that level RE OFTEN CALLED “subprime” lenders, because their riskier borrowers are considered less than “prime”.

FICO Credit Score Percent with Score
300-499 -------------------------- 1%
500-549 -------------------------- 5%
550-599 -------------------------- 7%
600-649 -------------------------- 11%
650-699 -------------------------- 16%
700-749 -------------------------- 20%
750-799 -------------------------- 29%

The company that creates the FICO is now marketing an updated version called the NextGen. The NextGen has a wider possible score range: instead of 300 to 850, the lowest possible score is 150 and the highest is 950. Your actual score, though, predicts about the same amount of risk in both systems. So, a 750 is considered a low risk score under both the FICO and NextGen formulas.

Your Credit Score Liz Pulliam Weston

FICO Score: What Is a Good Score?

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