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What is considered excellent credit?

By , CardRatings contributor
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Question: What is considered excellent credit?

Answer: This is a terrific question: unfortunately, there really is no exact answer because the term "excellent credit" is completely subjective. That being said, let me try to shed some light on the topic of credit scores in general, which may help you get a better idea of what excellent credit might be.

First of all, credit standing is relative to the economy and the lender. It was not very long ago that if you had a pet gold fish, it was probably eligible for a credit card! But seriously, excellent credit then was probably a score of 700 or above. It could have been even lower, just because some lenders allowed it to be so. Theoretically, in some cases a score in the 600s could have even been considered "excellent."

Having said all of that, in today's economic climate it is considered excellent only if it's 750 or above. See what I mean by "relative to the economy?" You may also be interested to know that credit scores are ranked in five intervals, each corresponding to 20 percent of the credit-carrying population and assigned the following point spread from highest to lowest: 850 to 780, 780 to 740, 740 to 690, 690 to 620, and anything below 620.

Additionally, though your score consists of several components, some are weighted more heavily than others. On time payment history is the most crucial, making up a third of your score. The next most important factor is your credit utilization--how much you owe in comparison to what you have available--accounting for another 30 percent of your credit score. Longevity of your accounts constitutes 15 percent of your score, while the type of credit you have--for example, secured vs. unsecured--accounts for 10 percent. Finally, recent credit inquiries affect the final 10 percent.

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