Last time we learned that credit is your financial reputation. But how exactly do lenders measure that reputation?
They use something called a credit score - a three-digit number that summarizes your creditworthiness.
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What does a higher credit score tell lenders?
Your credit score is like a grade for how well you handle borrowed money. The most common system is called FICO, which ranges from 300 to 850.
Just like school grades, higher scores are better and open more opportunities.
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On the 300–850 scale, where do you think yours would land?
Here are the FICO score ranges you should know:
300-579 is considered Poor, 580-669 is Fair, 670-739 is Good, 740-799 is Very Good, and 800-850 is Exceptional.
Most people fall somewhere in the middle ranges.
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Which range do you think most lenders prefer?
These numbers aren't just labels - they have real financial impact. A score above 740 typically gets you the best loan rates and credit card offers.
A score below 580 makes it much harder and more expensive to borrow money.
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How could a 100-point swing affect the cost of a car loan?
Your credit score gets updated regularly as new information reaches the credit bureaus. Pay your bills on time, and your score can improve within months.
Miss payments, and you'll see your score drop relatively quickly.
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How often do you think your score gets recalculated?
Lenders love credit scores because they provide a quick, standardized way to assess risk. Instead of reviewing your entire financial history, they can glance at one number.
This makes lending decisions faster but puts huge importance on maintaining a good score.
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What's one action you could take today to protect your future score?
Type
Sort Into Boxes
Practice Question
Let's practice identifying FICO score ranges. Sort these scores into the correct quality categories.
Labels
- First Box Label: Good Credit
- Second Box Label: Poor Credit
First Box Items
- 720
- 675
- 780
Second Box Items
- 520
- 450
- 575
