650 Credit Score

[clnp]

I have a question about credit scores. This is what most places say about them:

Excellent (750+)
Good (700 - 749)
Fair (650 - 699)
Poor (600 - 649)
Bad (below 599)

My question is, does a single point really matter? If I have a 649 credit score as opposed to a 650 credit score, will I be charged interest rates that are higher just because I one point below the threshold? On the same line, if I have a credit score of 650 and a friend has one of 699, will we still be offered the same interest rates even though there is a wide difference in our score?

[mholl95]

No...one point is not likely to make much of a difference. In fact, the ranges you provided aren't absolutes. Each creditor can and frequently does have their own rules.

For example, two mortgage lenders could have different mortgage rates for the ranges you specified. And as far as a score of 650 versus 699, yes that could result in your friend getting a better rate. But again, it will depend on the lender and type of loan.

I think the best rule of thumb is that if your score is 740+ then you're probably going to get the best rate the lender offers.

Cheers
Michael

[Retired To Win]

I worked for several years as branch manager for one of the credit reporting firms. And I can tell you that lenders look at everything, not just the credit score.

[Eagle]

I worked for several years as branch manager for one of the credit reporting firms. And I can tell you that lenders look at everything, not just the credit score.

I agree here Retired to Win...

There are different weights by various companies (I believe there are over 50 formulas in use) but here's a sample of how your FICO score is calculated...

Payment History (35%) – This is the first thing creditors generally look at. Have you paid past creditors on time? What kind of risk will you be in the future based on your past?
Amount Owed (30%) – What you owe on your accounts. What is your credit limit on your accounts? What do you owe?
Length of Credit History (15%) – How long your credit accounts have been open, the age of your oldest account, the age of your newest account, and the average age of all your accounts
Types of Credit in Use (15%) – This will include a mixture of retail accounts, installment loans, credit cards, mortgage loans, etc.
New Credit (5%) – It is generally accepted that opening multiple accounts in a short period represents a greater risk.

Having a good credit score will help you secure better interest loan rates.

Other things that can affect loans: Your income, length at current job, length of at current home, other debts, and money already saved up.

For any loan having a good down payment and money in the bank always helps lenders feel more secure.