Good Credit Vs Bad Credit: Loan Approvals at Each Credit Score

good credit vs bad credit

It’s important to build credit so you can qualify for loans and aren’t tied to a loan with bad rates. Perhaps you’ve wondered what loans you qualify for and how to compare good credit vs bad credit. Whether or not you qualify for particular loans usually depends on the lender, but your credit score will determine how high your interest rates will be, as well as the down-payment amount. Keep reading to learn more about how good credit vs bad credit effects loan approvals!

Loan Approvals With Bad Credit


Score of 520-529

A credit score in this range will make it extremely hard to get approved for loans, but it’s not impossible. For example, if you want to buy a house, most lenders will outright reject you. Even if you do qualify for a home loan, you will have extremely high-interest rates, even at rates half the principal loan. 

With car loans, you still have the possibility of being outright rejected but are otherwise easier to find. However, you will still have exuberant interest rates that could cost you upwards of $10,000 over the term of the loan!

With personal loans, if lenders don’t reject you, they might ask for collateral. This could be a title lien or a home deed. However, this can be extremely risky. Otherwise, your interest rate could be upwards of 20%!


Score of 530-549

As with the previous scores, your down payment and interest rates for a car or house will be extremely high. Lenders may even require you to have a co-signer for added security. However, it’s still not impossible to get approved for some loans.

To get a better idea of how this score can make life difficult, consider you are purchasing a house of $300,000 and you have a credit score of 535 to 540. Your interest rate is 5.9%, which is a jump from someone with excellent credit, 4.31%. It may not seem like much difference, but over the course of the loan, you will pay about $105,000 more than you would with excellent credit! 

Next, consider the price difference of an auto loan. Say your car costs $27,000 and your score is 535. With a 36-month payment agreement, you will pay roughly $500 more than with a score of 615. With a 48-month payment plan, you will pay roughly $700 more than with a score of 615. Last but not least, a 60-month plan will have you paying about $900 more than if you had a score of 615. That’s right! An 80-point difference in your score could cost you $900!

A score of 540 isn’t looking much better. Your interest rates are still too high. With a $27,000 car loan, for example, a credit score of 640 will put interest rates a little over 9%, while a score of 540 will be a little over 14%. That means with a 36-month auto loan, you will pay about $2,500 more, with a 48-month loan, $3,500 more, and with a 60-month loan, $4,500 more. 


Score of 550-579

With a score of 550 to 560, a $300,000 house can cost you over $68,000 more than if you had excellent credit over the course of the loan. While this isn’t as bad as a score of 540, it is still an enormous expense that will carry with you for years. 

If your credit score is anywhere between 540 to 570, car loans will have a similar expense. With a $27,000 car loan, for example, a credit score of 640 will put interest rates a little over 9%, while a score of 540 will be a little over 14%. That means with a 36-month auto loan, you will pay about $2,500 more, with a 48-month loan, $3,500 more, and with a 60-month loan, $4,500 more.


Score of 580-619

A credit score of 580 is a magical number where The Federal Housing Administration (FHA) will offer a home loan with only a 3.5% down payment. Anything lower than this, and your downpayment for an FHA home loan is 10%! For example, if you wanted to buy a house that costs $140,000, your downpayment would be almost $5,000 cheaper than if you had a credit score of 530! 

Keep in mind that even though you qualify for better FHA loans, most other home loan providers will charge high-interest rates and down payments. You could still be paying upwards of almost $70,000 more than someone with excellent credit, even if your credit score is 600.

With a credit score of 580, your car loan is still about 14% on a loan of about $27,000. Let’s compare it to a score of 680. With a 36-month auto loan payment method, you will pay about $3,700 more than if you had a score just 100 points higher. With a 48-month loan, you pay about $5,000 more. Lastly, with a 60-month loan, you pay about $6,500 more. In comparison, with a score of 590-600, your auto loan interest rate goes down to about 13%.

Loan Approvals With Fair Credit


Score of 620-659

So you’ve reached a credit range where things get a little easier! Yay! 

With fair credit, it suddenly becomes much easier to get loans. Most loan providers will lend you the money you need at fairly reasonable rates. While the interest rates will still be much higher than of someone who has good or excellent credit, you’re not in the bad credit red zone, which makes it much easier to qualify for loans. Additionally, you won’t have to have a co-signer, give up collateral, or pay astronomical interest rates.

Loan Approvals With Good Credit


Score of 660-749

Good credit makes it even easier to get a loan. If you are turned down for a loan and you have good credit, it may be because your income is too low, your debt-to-income ratio is too high, you’re self-employed, have irregular income, or there’s an error in your credit report. Otherwise, you should qualify for any loan you want. Though you may not qualify for the lowest interest rates possible, your interest will still be exceptionally low. 

Loan Approvals With Excellent Credit


Score of 750+

Congratulations! The world is your oyster. You are a free bird. Your tethers have been untied. You qualify for the best loan contracts out there, meaning you get the best interest rate with the lowest downpayment. 

Improve Your Credit Score Today!

Now you understand the effects of good credit vs bad credit! If you have bad credit, it’s best to improve your credit score before you get out those moving boxes, take that nice car for a test drive, or make another large purchase. 

Go Clean Credit is a company that helps individuals understand the difference between good credit vs bad credit and improve their poor credit scores. Contact them today for more information about how you can improve your score before you commit to a loan with bad rates!

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