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Tier 1 credit is generally defined as a credit score of 750 or higher. The term is most commonly used among auto lenders, but other lenders use it as well. People with tier 1 credit have the highest level of creditworthiness and will usually receive the most favorable terms on loans and lines of credit. They are considered low-risk based on their credit history, income and debt, and they are the most likely people to repay debts when compared to the general population.
Different lenders calculate credit tiers differently. That means you could apply for a credit card, have your score pulled and determined to be tier 1, and receive the best terms possible, but on the same day apply for an auto loan and receive less favorable terms because your score ranked as tier 2. That doesn’t necessarily mean your score changed that day, the auto lender could just have stricter requirements.
Without knowing exactly how a lender determines tier 1 credit, if it even uses that terminology, it’s a good idea to look at the generally accepted credit score ranges. Credit scores range from 300 to 850 overall, with scores of 750 and up considered “excellent” – the highest tier. More lenient lenders might consider tier 1 any score of at least 640 – the start of “fair” credit. It just depends on the lender.
Checking your credit report and score regularly is an important step in understanding your creditworthiness and what you can do to maximize your chances of having tier 1 credit. For personalized credit improvement advice and free daily credit score updates, sign up for a free WalletHub account.
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