Credit Score Scale

Credit scores can vary from a low of 300 to a high of 900. According to the latest figures, Americans are averaging about 720, so that means that 50% of people have credit scores below 720. And with the new tighter credit policies, that can be a problem. And the credit score scale has changed to reflect these new tougher requirements.

Before the credit and finance meltdown last fall in 2008, most lenders and creditors used a scale similar to the these examples for mortgages. 

Roll forward 6 months to February 2009, and this is how the average looks now:

Keep in mind that this is just using your credit score and no other factors. If you put down 50% or more, you can jump up to prime rate and below even if you have a 640. The amount of equity that the borrower has can have a huge positive impact.

As you can plainly see, the credit score scale just raised the bar considerably. No more squeaking by in the 600's without paying much higher interest rates. Your credit score has always been important, but the cost of a low credit score is increasing with the tightening of credit.

If you find your credit score below the minimum for prime rate, it's time to take a look at your credit report. In order to improve your credit score, you need to get a copy of your credit report and review the information.

You can read several articles here on our website to help you determine what you can do about incorrect or misleading information. You can also use our Improve Your Credit in 30 days Guide to help you get fast results.

In fact you should do that on an annual basis since new data can be added at any time from any of your creditors. Keeping an eye on your credit report will eliminate any surprises when you apply for credit.

And many companies use your credit report and credit score for other reasons. Prospective employers, insurance companies, and other organizations can use the information to determine rates and eligibility for jobs.

It's a good idea to keep any eye on the credit score scale too. That will tell you where you stand and what kind of interest rates you might pay on any future loans.