credit score
A good credit score is what each of us aspires to. After all, a credit score is one of the important determining factors when it comes to borrowing money – and getting a low rate when you do. But trying to pin down a specific number that means your credit score is “good” can be tricky. After all, there are lots of different credit scores that lenders use when trying to decide whether to grant you a loan and one lender’s “good” score may fall into another lender’s “fair” credit category. (Not to mention, you may score differently from model to model.) Luckily, there are broad rules of thumb that can help someone figure out whether their credit is good or not. Let’s break it down.
How Do I Rate? Most credit scores – including the FICO score and VantageScore 3.0 operate within the range of 300 to 850. Within that range, there are different categories, from bad to excellent. They generally look like this:
The Credit Score Range Scale
There are many different credit scores available to lenders, and they each develop their own credit score range. Why is that important? Because if you get your credit score, you need to know the credit score range you are looking at so you understand where your number fits in. Here are the credit score ranges used by major credit scoring models:
If your FICO score is 840, for example, you’re just 10 points shy of the highest score possible and your credit is “super-prime.” But if you have an 840 VantageScore 2.0, it’s not as spectacular because you’re 150 points away from the highest possible score.
What’s Your Score? Don’t assume your score is good (or isn’t) just because you have always paid your bills on time (or haven’t.) The only way to know whether you have a good credit score is to check. See a breakdown of the factors that affect your score and get recommendations for making your credit as strong as possible.
What Can I Get With A Good Credit Score? Some of the best credit cards — from rewards cards to 0% balance transfer offers —go to consumers with strong credit scores. A good credit score can also get you a lower interest rate when you borrow. That means you will pay less over time. For example, if you’re buying a $300,000 house with a 30-year fixed mortgage, and you have good credit, then you could end up paying more than $90,000 less for that house over the life of the loan than if you had bad credit. So, in the end, it really pays to understand your credit scores and to make them as strong as possible.
How Do I Get a Good Credit Score? To ensure your credit stays “good” in the long-term, it can help to pick one credit score and monitor your progress over-time. It also helps to pay attention to whatever is being cited as a “risk factor” — for instance, say, the amount of debt you’re carrying is too high — instead of a particular three-digit number. Addressing whatever is weighing down a single score will likely bolster your standing across scores. That’s because, while the exact credit score ranges may vary, most models are based on the same five categories:
So, to build a good credit score, you’ll need make all of your loan payments on time, keep the amount of debt you owe below at least 30% and ideally 10% of your total credit limit(s), maintain credit accounts for the long haul, add a mix of accounts (installment loans versus revolving loans, for instance) over time and manage how often you apply for new credit in a short timeframe.
Credit report mistakes can lead to disqualification for mortgages and car loans, as well as increased insurance premiums and interest rates. In some cases, those mistakes can even prevent you from getting a job.
Consumers have started enlisting community credit repair to dispute negative items on their credit reports.
How Do I Rate? Most credit scores – including the FICO score and VantageScore 3.0 operate within the range of 300 to 850. Within that range, there are different categories, from bad to excellent. They generally look like this:
- Excellent Credit: 750+
- Good Credit: 700-749
- Fair Credit: 650-699
- Poor Credit: 600-649
- Bad Credit: below 600
The Credit Score Range Scale
There are many different credit scores available to lenders, and they each develop their own credit score range. Why is that important? Because if you get your credit score, you need to know the credit score range you are looking at so you understand where your number fits in. Here are the credit score ranges used by major credit scoring models:
- FICO Score range: 300-850
- VantageScore 3.0 range: 300–850
- VantageScore scale (versions 1.0 and 2.0): 501–990
- Experian’s PLUS Score: 330-830
- TransUnion New Account Score 2.0: 300-850
- Equifax Credit Score: 280–850
If your FICO score is 840, for example, you’re just 10 points shy of the highest score possible and your credit is “super-prime.” But if you have an 840 VantageScore 2.0, it’s not as spectacular because you’re 150 points away from the highest possible score.
What’s Your Score? Don’t assume your score is good (or isn’t) just because you have always paid your bills on time (or haven’t.) The only way to know whether you have a good credit score is to check. See a breakdown of the factors that affect your score and get recommendations for making your credit as strong as possible.
What Can I Get With A Good Credit Score? Some of the best credit cards — from rewards cards to 0% balance transfer offers —go to consumers with strong credit scores. A good credit score can also get you a lower interest rate when you borrow. That means you will pay less over time. For example, if you’re buying a $300,000 house with a 30-year fixed mortgage, and you have good credit, then you could end up paying more than $90,000 less for that house over the life of the loan than if you had bad credit. So, in the end, it really pays to understand your credit scores and to make them as strong as possible.
How Do I Get a Good Credit Score? To ensure your credit stays “good” in the long-term, it can help to pick one credit score and monitor your progress over-time. It also helps to pay attention to whatever is being cited as a “risk factor” — for instance, say, the amount of debt you’re carrying is too high — instead of a particular three-digit number. Addressing whatever is weighing down a single score will likely bolster your standing across scores. That’s because, while the exact credit score ranges may vary, most models are based on the same five categories:
- Payment History (accounts for 35% of most scores)
- Credit Utilization (accounts for 30% of most scores)
- Length of Credit History (accounts for 15% of most scores)
- Mix of Accounts (accounts for 10% of most scores)
- New Credit Inquiries (accounts for 10% of most scores
So, to build a good credit score, you’ll need make all of your loan payments on time, keep the amount of debt you owe below at least 30% and ideally 10% of your total credit limit(s), maintain credit accounts for the long haul, add a mix of accounts (installment loans versus revolving loans, for instance) over time and manage how often you apply for new credit in a short timeframe.
Credit report mistakes can lead to disqualification for mortgages and car loans, as well as increased insurance premiums and interest rates. In some cases, those mistakes can even prevent you from getting a job.
Consumers have started enlisting community credit repair to dispute negative items on their credit reports.