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Knowing your credit score is a key step in determining where you sit financially when it comes time to apply for any type of credit. Having your own report on how lenders view your credit-worthiness can help you take appropriate measures, if needed, to improve your credit. Improving your score with the help of a credit repair company will make you the most attractive loan candidate you can possibly be.

A good credit score, however, often means different numbers depending on the type of credit you’re seeking. What may be an ideal score to obtain an excellent interest rate on a car loan, might not be the same for obtaining the optimal rate on a home mortgage. If you’re a business, then the interpretation of credit scores will again, be different for particular loans.

A great credit score means so much more savings due to lower interest rates obtained on loans. Someone with poor credit, if he/she is able to obtain another loan at all, will get one at a very high-interest rate. This type of person has an uphill struggle due to continually throwing money away in interest, while at the same time attempting to get out of debt.

A person who can maintain a high credit score is someone who is already saving money by paying very low-interest rates, and someone who will continue to be awarded low APR credit lines in the future. If you’re looking to earn or maintain good credit for an upcoming future purchase, you may benefit from knowing exactly what number range you should be looking to fall in based on the type of loan you’re looking for.

 

General Ratings

Generally speaking, on a FICO or VantageScore rating of 300 to 850, a score of 750 or above means you have excellent credit — so congratulations! If your score falls between 680 and 749 you are no longer deemed excellent, but your credit is still good. You’ll start to feel the interest rate pain at a score between 620 and 679, which earns you a rating of fair. 580 to 619 is bad — literally your rating is “bad”. And if it couldn’t get any worse, there is actually a category called “poor” for anything lower than 580.

 

Auto Loan Scores

If you’re looking to shape your credit score with the intention of getting the best possible rate on an auto loan, then you’ll want a score of 740, at least. 740 and above, according to Experian, will get you somewhere around a 4% APR or lower for a new automobile, and 5.6% or lower for a used car. If you have a score higher than 780, you’re in luck. You’ll be enjoying around a 3% interest rate for a new car, and a 4% interest rate for a used car.

 

Mortgages

Wiggle room is much smaller on home mortgages, mostly because the average mortgage amount is so much higher than the asking price for a car. Still, the better the credit, the better the interest rate. Anything 720 or higher should get you into the sub 4% range on a 30 year fixed mortgage according to FICO (2017). A score of 760 or higher will do you one better, getting you a monthly rate of around 3.5% or lower.

 

Business Loans

Minimum good standing scores are a little lower with business loans, but not by a huge margin. If you have a credit score of 680 or higher, chances are you’ll be able to score a good long term business loan for a decent chunk of change with long repayment terms. Of course, the higher your score, the better the terms you’ll be able to acquire.

Within the world of business loans, there are different tiers of eligibility based on the type of loan you’re looking for. Minimum credit score eligibility lowers for short term loans compared to long term loans. Equipment loans also carry lower score requirements than long term business loans.

 

Business Credit Scores

If you’re an existing business with credit, you’ll be assessed for a credit score by different means than the personal credit scoring algorithm implemented by FICO or VantageScore. Business credit scores range from 0 to 100. They fluctuate widely as there is no industry standard between the three bureaus for determining a business credit rating.

For the most part, business credit scores are calculated based on the credit history of your business accounts. However, if you are a small business, such as a sole proprietorship, there may be some mixing of personal and business credit data.

 

Which Score You Should Choose

The two primary scoring systems used by the three major credit bureaus are FICO and VantageScore. However, most lenders use proprietary score calculating programs for their own use; these scores you’ll never see.

Luckily these numbers are similar enough to FICO and VantageScore algorithms, that you can feel pretty confident that your excellent credit score on your report will translate to the excellent credit score that a potential lender sees as well.

Differences between FICO and VantageScore are also very minimal. FICO has been around the longest, but they both use the same scale — 300 to 850. Small differences include minimum debt amounts for inclusion into credit score calculation, differences in influence on the score based on the type of existing debt (i.e. mortgage vs. auto vs. credit card), and established credit history minimum lengths (one month for VantageScore vs. six months for FICO).

There are key components of credit that also have different levels of influence on your credit score. FICO and VantageScore use a credit score formula that allows 35% of the score to payment history, 30% to outstanding debt, 15% to how long you’ve had credit, 10% to the types of credit currently in use, and 10% is given to the frequency of newly opened accounts or consumer-initiated inquiries.

Whichever you choose to access – FICO or VantageScore – knowing where you stand financially and what specific areas within your credit report you need to improve upon will set you up well for obtaining the best rate you can on the next auto loan, business loan, or home mortgage.