Credit terminology can seem confusing. Super-prime. Prime. What is prime credit anyway? As you might be able to guess by its name, prime credit is a good thing, and it’s a goal to shoot for when it comes to establishing and maintaining your credit score. Educate yourself on prime credit, so you’re ready to take advantage of the right borrowing opportunities.
Definition of Prime Credit
Simply put, prime credit means your credit score falls within a range that’s attractive to lenders and creditors. They want to lend to borrowers with prime credit because they can be reasonably sure you’re going to pay it back. While it’s not as high of a category as super prime, people with prime credit are low-risk. Each credit bureau has its own definition of prime credit, which can range from as low as 150 and as high as 950, and includes the very high-end super-prime category.
Prime Credit Ratings
- Equifax 280-850
- Experian 330-830
- TransUnion 150-950
Benefits of Having Prime Credit
Because of the reduced risk that comes from lending to people with better credit, credit card companies and other lenders offer some of their most competitive interest rates and terms when you have a prime credit rating. Now, borrowers with super-prime credit will still pay a lower interest rate because they’re an even lower risk, but a prime credit rating will allow you to access loans and lines of credit, even in a more competitive market.
Know Your Credit Score
It’s important to stay on top of your credit scores so you always know where you stand and if you have any issues to address. You can request a free copy of your credit report every year from each of the three major credit bureaus - Equifax, TransUnion, and Experian. Know what your score is before you apply for a loan. You might be classified a prime with one and near-prime with another, which means you’ll be offered very different loan packages. It all depends on where the lender pulled your credit score.
Avoid Credit Trouble
Missed payments, late payments, and accounts that have gone to collections are some of the big things that affect your credit. Sticking to a budget and having an emergency fund saved can help you avoid those issues. It’s better to take advantage of title loans and other resources. Aim for prime credit, and even super-prime credit, and you’ll be in the driver’s seat when it comes to borrowing.
If you apply for a loan with several different companies, you might be surprised to find that some classify you as having prime credit while others classify you as having super-prime credit. Or, if your score is toward the lower end of the prime range, you might find that some lenders classify you as having prime credit while others classify you as having near-prime credit. Because your credit file with each bureau may contain slightly different information, the score range you fall into with each bureau could be different, and lenders might offer you different rates depending on which bureau they pull your credit score from.