It's actually 4th grade math. Let's break it down like it's school.
Are You Chasing the Wrong Number?
- Are you an overachiever trying to get that magical 850 credit score?
- Did you get straight A's in school and expect the same of your credit score?
- The best interest rates for the 2 biggest purchases in our life — home and auto loans — are offered to folks with a 720+ credit score.
- 800 is great but it does not get you a better rate on your loan, it just makes you feel a bit better.
- Most folks that crack the 800 credit score barrier have had a mortgage for 15+ years and a very old credit card for 20+ years.
Breaking Down the Grades, A+ to F
- A+ is 720 and higher — any points above that are similar to likes on Facebook, it makes you feel better, but it does not make a real difference in reaching your goals.
- 700 to 719 is an A — you can get a mortgage or a car loan at a non-predatory interest rate.
- 661–699 is a solid B — you could get a decent rate on a car loan under 10%, however hold off on the mortgage until you break 700.
- 620–660 is a C — you still have work to do before getting a mortgage; if you need a new rental, this score will get you approved for a move-in special. Do not take the advice to get your mortgage now and refinance later — you'll spend thousands of dollars in additional commissions for the refinance.
- 600–619 is a Solid D — this is where the predatory lenders live, do not even consider buying a car with this credit score as you will be driving it to Bankruptcy Court.
- 599 and below is an F for Failing the class — do not apply for ANY credit with this score, as it will send you into a vicious financial cycle heading down a one-way street to disaster.