Is FICO Credit Score of 750 Considered Good or Excellent?
Reader question: "I recently ordered my FICO credit scores and found out that my highest one (Experian) is 750 points. Is a credit score of 750 considered good or excellent? Will it help my get qualified for a mortgage loan? What about a car loan?"
This is one of the most common questions we get from our readers (credit scores in general, not just the 750 number). That's what prompted me to create this ongoing tutorial on the subject. This article is specific to home buyers, and you did ask about mortgage loans. So you might want to read this one next. It's one of the only articles on the website that gets updated on a regular basis. So it's certainly worth a read.
Now, on to the question at hand: Is a FICO credit score of 750 considered good or excellent? There aren't any exact definitions for "good" and "excellent" within the context of credit scoring. But I'd say you are right on the line between the two -- and leaning toward the excellent side. Some lenders will consider a 750 as a very good credit score, while others will consider it to be excellent.
So, you're in pretty good shape, as far as getting a loan. Your score is above average. From a credit standpoint, you should have no trouble qualifying for a mortgage loan. Auto financing will be even easier for you.
Credit Scores and "Labels" are Hard to Connect
In reality, it's hard to connect words like "good" and "excellent" to a certain FICO score. This is what leaves home buyers confused and frustrated. If you've been researching this subject for any length of time, you probably realize this already. You see people talk about good or bad credit, but you don't see any numbers assigned to those labels. The words, by themselves, are useless.
For instance, a subprime borrower is defined as a person who cannot qualify for prime financing. But what does this equate to, in terms of the actual credit score? A FICO score of 620 or below? A score of 599 or below? It's hard to say. It varies from one lender to the next. I've also seen people define a subprime borrower as someone with "less than ideal" credit. This is even less helpful than the previous definition.
I've made an effort to solve this problem by inserting some actual numbers. You'll find this information in the article I mentioned earlier.
FICO 750 Should Open Plenty of Doors
A few years ago, a credit score of 650 or higher might have qualified you for the best mortgage rates available. But not anymore. The current housing market (2011 - 2012) is vastly different from the market we saw in the bubble days. Today, you'll probably need a FICO score of 750 or higher to get the best rates. And even then, you might have to pay additional points at closing.
But even today, a 750 is still considered a good credit score. It's certainly better than average. So it should help your cause when applying for a mortgage loan. And if you measure up well in other areas (such as your income and debt levels), you should have no trouble getting approved for a mortgage.
What is an Excellent Score?
So that answers one of your questions: Is a credit score of 750 considered good? Yes, that is still a good score in the current economy. You also asked if it was considered an excellent score. It really depends on how you define these words.
- If you define the word "good" as meaning you'll be able to qualify for a mortgage loan, then a 750 meets that definition in this economy. You are clearly on that side of the fence.
- If you define an "excellent" score as one that qualifies you for the best interest rates a mortgage lender has to offer, then I would say you're sitting on the fence. Some lenders will offer you their best rates with a FICO credit score of 750 while others may not.
On the MyFICO.com website, you can download a booklet in PDF format that gives a pretty good overview of what FICO scores are and how they work. The document was created by the same company that created the actual FICO scoring model (Fair Isaac Corporation). Who better to listen to on this subject? Here is what they had to say in a section labeled as "What is a Good FICO Score?"
"Since there's no one score cutoff used by all lenders, it's hard to say what a good FICO score is ... one lender may offer lower interest rates to people with scores above 680, while another lender may use 720, and so on."
This quote only underscores what I've said already. A score of 750 will probably be considered good by most lenders today. So you probably won't have any trouble getting qualified for a mortgage loan with that score, as long as the loan is within your budget. But whether or not those same lenders will consider a FICO credit score of 750 "excellent" -- and whether they are prepared to offer you their best rates -- is something else entirely.
Here's the good news. Most lenders will tell you what their general criteria are, in terms of credit scores. They will tell you, for example, what their cut-off score is for getting the best rate on a loan. You can also find out where you stand by applying for a quote with a lender. So there's really no reason to listen to speculation and opinions on this subject -- just go out and get the real scoop from a mortgage lender. You've got nothing to lose.
One of Several Qualifying Factors
Of course, the lender will consider other things beyond your FICO score. A lender will also want to know how much money you make, in order to judge the affordability of the loan you want. To do this, they will also consider your total amount of debt in relation to your gross monthly income. This is known as the debt-to-income ratio, and it's another key factor in mortgage approval.
Related reading: How to qualify for a mortgage loan
So while a FICO score of 750 may be considered excellent by some lenders, it's not the only factor in their decision-making process. They also want to know where you stand in terms of debt, income, employment, down payment, etc. Something to keep in mind.