Find out more about the entire range of credit scores and what is a good credit score range to aim for if you’re curious about credit score ranges and where yours falls on the scale. [Duration – 1:35].
Your credit score is a three-digit figure that indicates your creditworthiness, or the likelihood that you will make timely loan repayments to lenders.
When determining whether to grant you new credit, prospective creditors and lenders consider your credit score among other things. Your credit score may also be used by lenders to determine the terms and interest rates associated with any credit they extend.
Credit scores typically range from 300 to 850. Scores fall into one of five categories within that range: poor, fair, good, very good, and excellent.
Ever felt like your business is stuck in a financial rut? You’re not alone Many small business owners struggle to secure the funding they need to grow and thrive But there’s a secret weapon in the world of business credit: Tier 4 vendors.
What are Tier 4 vendors? They’re the big leagues of business credit, offering high-limit credit cards and auto loans without requiring a personal guarantee. Think of them as the VIP section of the business credit world, where the serious players reside.
But how do you get there? It all starts with building a strong business credit score. And that’s where the Credit Suite vendor tiers come in. These tiers are like a roadmap, guiding you through the process of establishing business credit and unlocking access to progressively higher levels of funding.
Think of it like climbing a ladder. You start with Tier 1 vendors who are more likely to extend credit based on basic Fundability guidelines. As you climb the ladder, you’ll encounter vendors in Tiers 2 and 3 who require a stronger PAYDEX score and other indicators of financial health.
Finally, you reach the summit: Tier 4. These vendors are the ultimate destination for businesses with a proven track record and a solid credit score. They offer the kind of funding that can truly catapult your business to the next level.
I mean, can’t you just apply straight for high-limit credit cards and auto loans and avoid having to deal with Tier 4 vendors? If you are willing to use a personal guarantee and have a high personal credit score, you may be able to get approved without going through the tiers.
However, there’s a catch. Bypassing the tiers means missing out on the opportunity to build a strong business credit portfolio. And that’s crucial for long-term success.
Think of it like building a house. You wouldn’t start with the roof, would you? You’d lay a solid foundation first. Similarly, building business credit is a step-by-step process. By working through the tiers, you’re laying the groundwork for a strong financial future for your business.
So, what are some examples of Tier 4 vendors? Here are a few:
- Ally Car Financing Through Credit Suite: Ally provides personal financing, but they’ll also report to business credit bureaus. If your business qualifies for financing without the owner’s guarantee, you can get financing in the business name only. They report to Experian and Equifax.
- Ford Commercial Vehicle Financing Through Credit Suite: Ford offers several commercial vehicle financing options, including loans, lines, and leases to actual business entities. They may ask for a Personal Guarantee (PG) if you’re not approved on the merit of your application. Ford will report to D&B, Experian, and Equifax.
- Frost Bank Business Rewards Credit Card: Frost Bank requires $5M annual revenue to avoid a PG. You also have to apply in person. If you apply online, a PG may be required regardless. They only offer financing to current customers, and there’s no minimum time in business requirement.
Remember, building business credit is a journey, not a destination. By working through the tiers and establishing relationships with Tier 4 vendors, you’re setting your business up for long-term success. So, what are you waiting for? Start climbing the ladder today!
How are credit scores calculated?
Your credit score is calculated using the information found on your credit report. A number of factors could affect your credit scores, including your payment history, the variety of credit accounts you have, the length of your credit history, and your credit utilization rate, which is the proportion of your available credit limits that you are using.
However, theres more than one way to calculate your credit scores. Lenders and credit reporting agencies often use different scoring models. One model might place the most importance on your payment history. Another could prioritize the types of credit you have available. Because of these differences, your score could vary depending on how it was calculated.
Your scores may also vary based on the credit reporting agency providing them. The reason behind this is that not all creditors and lenders provide data to the three national consumer reporting agencies (Equifax, TransUnion, and Experian). Some may report to only two, one or none at all.
Credit score ranges – what are they?
Theres more than one credit scoring model available and more than one range of scores. However, most credit score ranges are similar to the following:
- Excellent People in the 800–850 range are regarded as low-risk borrowers. When compared to borrowers with lower scores, they might find it easier to get a loan.
- 740–799: Very good People in this range have a track record of good credit behavior and might find it easier to get new credit approved.
- 670 to 739: Credit scores of 670 and above are typically considered acceptable or lower-risk by good lenders.
- Fair People in the range of 580 to 669 are frequently referred to as “subprime” borrowers. They might be viewed as higher-risk by lenders, and they might struggle to get approved for new credit.
- 300 to 579: It is common for low-income people in this range to have trouble getting new credit approved. If your credit score is in the poor range, you probably won’t be able to get new credit until you take action to raise it.
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FAQ
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