Here is a question that resurfaces at least twice a year:

I should have a credit score of over 800 for the best rates, right?

Well, not necessarily.  FICO scores range from 300 to 850; most lenders have a minimum score required for loan or credit card approval, typically in the mid 600s to lower 700s right now.

Yes, it is true that the higher your score, the better your interest rate….up to a point.  As you can see on the interest rate chart on the FICO site, every 20 points can mean a lower rate on mortgages and every 40 points can be a lower rate on auto loans. 

However, after a certain point in the 700s, there is no better rate – you are already getting the best rate lenders are offering.  So a 770 is just as good as an 805 when it comes to interest rates.

Now some people just like the feeling of being able to say they have an 800 FICO score.  And some people feel they should have it just because they are good customers.  It doesn’t work that way, though.  So they’ll have to settle for a great interest rate and know that their chances of reaching 800 get better over time, with good credit building habits.  Click here to find some good habits to start today.

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