What is considered a Good Credit Score?

In a nutshell, a good credit score is simply a high rating from a credit bureau or agency for a particular person that has a solid credit history, resulting in low risk to a lender.

To find out what is considered to be a ‘good’ credit score firstly depends on where in the world you are situated. In some countries like the US, UK and Australia Experian are among the most popular of credit agencies that issue credit reports to the population. Experian have their own set of rules and their credit report for the same person may yield a different result when compared to another credit agency such as Equifax. Please also note that actual ratings may be different too.

This makes determining exactly what a good credit score is. However a general idea of a person’s credit score can easily be manipulated from data from credit agencies in any region or country. All bureaus use a mathematical formula or algorithm to give an individual their rating; this is usually in the form of a simple number by using a sliding scale which may run from 300 (bad) to 850 (excellent) for example.

Simply put, by earning a high number or relative score in a particular area, the better someone’s credit score is. The ability to obtain high volumes of credit at the best rates of interest are given to those with good credit scores. So a person in the top 20% of a credit agencies rating are considered low risk with excellent credit scores. The top 40% would be considered with a good credit score, top 60% average credit, top 80% would have a poor rating and the last 20% with a very poor rating.

The further down the pecking order a person is with their rating, the less chance they will have of obtaining credit and if they did the higher interest they would pay. It is worth noting however that different lenders use different formulas to determine whether to accept an application or not. Therefore, if one application is declined, another lender may accept it even though the person’s rating is the same.

Some credit bureaus use numerical figures to assign a credit rating and others use alphabetical grades and some both. Either way the higher the number or letter grade, the higher a person is considered to have a good credit score.

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