Your credit score can make or break you

The FICO credit score is a three digit number, that tells prospective lenders everything they need to know in just three digits. It’s a product of Fair, Isaac and Co., and it represents everything that you have ever done financially, distilled to just a simple number that ranges from 300 to 850. That is what we have often reported, and that’s what you will read elsewhere. But what do the numbers mean? How does 500 compare to 700? What can you get for 400? We’ll discuss the numbers in general terms and how they work for most people.

400-499 While the scoring system starts at 300, no one really has that score. It’s sort of like the SAT score; you get points for just putting your name on the paper. Rock bottom probably starts at about 400 and runs to 499. A score in this range is terrible and you won’t be able to get any lender to give you anything. You might not even be able to get a job with a score this low. Anyone who looks at a score in this range will see you as a huge risk.

500-599 Bad and/or damaged credit. You have probably had credit extended to you and you mismanaged it by not making payments or not making them on time. If you can get a car loan or a mortgage you will have to pay interest rates that will border on obscene. You may still have trouble obtaining a job as many employers will still see you as a risk, especially in any job that requires you to handle or work with money.

600-699 This range covers people with marginally poor to marginally good credit. At the low end, you can probably get a high interest credit card or an auto loan. Towards the top, you should get average to slightly better than average terms on a car, home or a credit card. This is the range where just a little bit of improvement in your score can do a lot of good for you.

700-740 In this range, you can probably get as good a mortgage rate as anyone. You probably wouldn’t have trouble buying a second home, either. Credit card companies will woo you with their best rates.  There is not much you cannot do with credit in this range.

Above 740. This is the best there is. At this point, you probably have 30 years of good credit, a spotless history with no late payments, and a variety of credit already with a number of different lenders. You can probably get any type of loan that you need quickly and without hassle.

Most people fall in the 600-700 range, with only about 15% of the public falling below 600. You’ve got to have a lot going wrong to fall below 500. And a credit score of 800 is possible. All you need to do is pay your bills and take your time.

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