You certainly know that your credit history spells out the mode of your financial transactions, and also plays a role to determine whether you would get a job or not. So, it is crucial for you to keep an eye on your credit rating and ensure it maintains a commendable status at all times.

Now, do you really know what is considered a good credit rating? There are varieties of factors that determine a good credit rating – they include the following;

1. Your current debt to income ratio
2. Your proven credit history
3. Your outstanding bad debt (auto loans, unsecured credit card debt etc)
4. The three factors above versus the amount of good debt you have

What a Good Credit Rating would Do for You

Good credit rating opens desirable opportunities for those in possession of it. If you have a great credit rating, you will qualify for prime loan rates, particularly the standard rate. Also, creditors (including financial institutions) would give you a preferential treatment over people with bad credit history or poor credit rating. Your excellent credit rating will pave way for you to qualify for loans featuring lower than prime interest rate.

Do Lenders Assess Credit Rating Differently?

Lenders may have a different way of assessing what constitutes good credit rating. In general, good credit rating is relative and its definition is flexible. For lenders, what matters most is the specific aspects of your credit score, other aspects may not count so much.

As mentioned earlier, flexibility is a critical factor in defining a good credit rating. Consequently, you would likely get different answers from different individuals concerning what constitutes ‘optimal’ or ‘good’ credit score. However, financial experts suggest that an acceptable credit rating (top notch score) should be nothing less than 720 using a scoring method structured by the Credit Monitoring Agency Experian. Also, one of the experts stated, in a manner that appears conflicting that someone whose score is above 690 is considered to be in possession of a good credit rating, and would generally obtain favorable loan rates.

Some agencies even consider 620 score to be good, and are willing to offer a prime rate with such score. On the contrary, other sources insist on nothing less than 770 as the optimal credit score, while several other organizations assert that 650 – 690 range is sufficient to earn an individual a good credit rating.

What You Should Do

From the foregoing, it is obvious there is no concrete agreement on what constitutes a good credit score. So, if you intend to seek for loan, it is better to shop around, especially if your credit rating is floating below 650. You may be lucky to get favorable interest rates. However, any credit score floating in the top 600s does not impress banks and other lenders.

Work hard to fine-tune your credit score, at least to 700 and above.