Everyone talks about the importance of having a good credit score, but for most of us, we don’t worry about what our number is until we need something.
If you’re in the market for a new car, a house or a credit card, it’s always good to have an idea of what kind of credit score you’re going to need before applying for a loan.
Read on to find out the average credit score you need for five common things, from auto insurance to credit cards.
When it comes to shopping for a new vehicle, your credit score will be one of the first questions car dealers ask you — and one of the first things they verify. If you walk in with a high credit score, you’ll get a lower interest rate and a better lease deal.
At the end of 2018, people who borrowed money for a new car had an average credit score of 718. Used car borrowers had an average score of 659.
But even if you’re credit score isn’t in that range, you’re not out of luck. According to Experian, in 2017 20 percent of car loans went to borrowers with subprime and deep subprime credit (those are scores of 600 and below.)
If you’re in the market to rent an apartment or a home, landlords or leasing agents will have you fill out an application and run a credit check.
According to FICO, the minimum credit score needed as a renter is between 600-620, which rests in the “fair” credit range and is a little bit below average.
However, this can change based on location and even the type of apartment. If you’re looking to rent a bargain apartment, you’ll get away with a lower credit score. But if you’re eyeballing a luxury spot in Manhattan or San Francisco, you’re credit score may have to be in the high 700’s to as close to 850 as possible.
A good credit score is imperative when it comes to calculating interest rates.
The table to the right, provided by FICO, shows how a range of credit scores can come into play when it comes to mortgage rates. To get the lowest rate, you’ll need a credit score range of 760-850. These rates are based on a $300,000 30-year, fixed monthly payment.
When it comes to auto insurance, your credit score is combined with a few other figures to create a credit-based insurance score that then determines your insurance rates.
The main difference with this score is that it also includes a prediction of your likelihood of filing a claim as opposed to your odds of defaulting on a loan or line of credit. Juxtaposing this data allows insurers to see a correlation between financial mistakes and motorist mistakes.
According to The Zebra’s 2016 auto insurance report, drivers with excellent credit scores (823 or higher) pay only $1,130 on average for their insurance. Drivers with lower credit scores, however, will most likely pay a great deal more. The average insurance premium for someone with poor credit (524) is $2,411.
When it comes to getting a credit card, whether it’s through a bank or one through a retail store, each credit card has a different set of requirements. In fact, retail store cards are easier to get, even with bad credit, however higher-end credit cards, with loads of perks and benefits, often require an excellent credit history.
If your score is above 760, for instance, you will most likely be approved for almost any card from major issuers including premium cards with excellent rewards and benefits. Those with a credit score between 700 and 759 will most likely be approved for decent cards from major issuers, but not high-end cards. Applicants with a credit score below 600, on the other hand, will most likely only be approved for store credit cards or secured cards designed for people with bad credit.