A good credit rating can be determined through a variety of factors. Your proven credit history, your current debt to income ratio, and your amount of bad debt (unsecured credit card debt, auto loan, etc.) versus your amount of good debt (mortgage). People with a good credit rating generally qualify for prime rates on loans, especially the normal rate.
People with an excellent credit rating can qualify for loans with a lower than prime rate
Lenders can assess what constitutes a good credit rating differently. In fact, good credit rating defines flexibility to a degree, and some lenders may be interested in certain aspects of your score, more than in other aspects. You can ask lenders which aspects of your credit score are most important.
Since flexibility in what is considered a good credit rating exists, you will get different answers from different people about what is a “good” or “optimal” score. Financial guru Suze Orman suggests that a good credit rating, really a top notch score should be at least a 720 Fair Isaac Company (FICO) score, a scoring method developed by the credit control agency Experian. Orman has also stated, in a contradictory manner, that a score of over 690 is a good credit rating, and generally required to get better loan rates.
Optimal credit rating
In fact, just getting a good credit rating, some agencies that Eugene believes are 620 good. They will offer you a prime rate. On the other hand, some sources, like PBS show Frontline, suggested that 770 is the optimal credit score. Most companies say you need at least 650-690 to have a good credit rating. An optimal credit rating is always considered over 700, and usually in the mid-700s.
Since there are many interpretations of what a good credit score can be one of the things consumers need to do is shop around, especially when their credit rating is floating in the top 600s. In some cases, this credit rating will qualify you for lower interest rates. Other banks and lenders are unimpressed by this score. If you have a good or better than good credit rating, it can really be a money saver to find out which lenders are likely to offer you the best deals.
When you know you are a good credit rating or you think you do, lenders ask what score they consider a good credit rating. Virtually all lenders are a formula for calculating interest based on their definition of poor and good creditworthiness. When you know what number each lender considers a good credit rating, you can make decisions about the places you can best apply for credit.
If your rating is below 600, you may be treated at risk as a borrower
Failing to have a good credit rating usually means paying higher interest rates. When you can, try to improve your credit rating by making payments on time, by paying off credit cards and by reducing your debt to income ratio. Also, try to avoid accumulating more bad debts as this may further reduce your credit rating. Application for new credit, especially of the credit card variety, can also drop a rating.