Credit Score Scale: Where Are You on the Credit Score Rating Scale?

There are many credit score scales used by lenders. The first one and still the most often used credit score scale was created by the Fair Isaac Corporation; that is why a credit score it is often referred to as FICO score. FICO credit score rating scale is the most commonly used credit scoring system in the United States. The FICO scores range from 850 to 300. Every creditor may determine what they consider a "good" or "bad" credit score. For example, one creditor may decide that a score of 700 is not enough to qualify you for their best interest rate, while another may be willing to do so. According to FICO, the United States median score is 723.

There are three major credit reporting agencies in the US, and each of them calculates their own score based on the information they have on file.The top three credit agencies are Experian, Equifax, and Trans Union. They are three are private companies that assign you a credit rating based on information provided in your credit report.

Positions on credit score scales are computed using complex mathematical algorithms which take into account factors such as payment history, length of credit history, credit availability, existing or current debts, bankruptcies if any, etc. The factors used to calculate the scores are basically the same, but your credit scores and reports may vary from company to company.

Many people believe credit scores are permanent or or take a long time to change. This is not true. Your credit score changes as your credit report changes. Therefore, your position on the credit score scale can change frequently since new information is added to your credit report all the time. While the formula used to calculate credit scores is not designed to change by many points over short periods of time, credit scores change all the time. Bad credit scores can be raised by eliminating the "bad" behavior and adding "good" behavior.

When considering a customer applying for a loan, the creditor will analyze not just the credit score of the borrower, but also other factors, such as age, current income, employment history and assets.

The FICO score has a scale of 300-850 with 720 and above considered as "good credit rating". Having a good score usually means that the person is creditworthy. However, this does not mean that those with scores under 720 stand no chance of getting credit, since lenders may still approve them for loans. However poor credit score will usually mean less favorable terms and higher rate on the loan.

--700 and above. Excellent or Very Good credit. Low credit risk. Anything above 700 places you in the low credit risk category, which means you should be able to qualify for the best interest rates and payment terms, depending on other factors.

--680-699. Good credit. You can get approved for a loan on pretty good terms.

--620-679. Moderate or OK credit. Moderate credit risk. You won't be denied credit but the terms are not going to be too favorable. This means that while you will not receive the best interest rates, you should still be able to borrow at reasonable rates. You may want to think about how to increase your credit rating a bit to get into the "good" category.

--680-550. Poor credit. If your score is lower than 680 points, you will be considered a rather high credit risk, and interest rates that you'll be offered may be considerably higher than a person's with a excellent or good credit score. You could you also run into trouble with getting approved for a loan.

--below 550. Very bad credit. You are considered a high credit risk. A score under 550 is considered very bad credit; a score this low will likely make it difficult for you to get approved for loans, and if you do get approved, they will carry high interest rates and fees.