If your homework is graded on a scale of 0 to 100 by your teachers, your financial habits are graded from 300 to 850 by your credit score.

A good credit score can save you some serious cash—think $5,000 on a 60-month $20,000 auto loan, according to one study—and even more when you purchase a home, but a poor credit score can get your loan application for either denied altogether.

Your credit score is a three-digit number that predicts the likelihood that you’ll pay back a loan or credit card balance by evaluating your past financial behavior related to loans and credit cards. In other words, it evaluates your “creditworthiness,” or whether or not a lender should approve you for a loan or credit card. Your credit score will rate your creditworthiness on a scale from 300 to 850 as poor, fair, good or excellent.

Credit Scores in a Nutshell

When credit scores were first developed, they were not standardized. Lenders and creditors would create their own “score card” to assess the risk of lending to a consumer based on that person’s credit report. In the 1980’s, the Fair Isaacs Company, an analytics service, created the first standardized credit scoring system in the hopes of eliminating inconsistencies. The resulting FICO score remains the most well-known credit score today.

Each of the three credit bureaus—Equifax, Experian and TransUnion—sell their own FICO scores to consumers by using Fair Isaacs software to generate the scores. For that reason, you don’t have just one FICO score. Each of the three credit bureaus produces several versions (if you want to see how many, check out this infographic from Credit Sesame), but they are similar: If you’re rated “excellent” by one credit scoring model, you should be “excellent” in all the others.

Credit score models generally include some typical factors, listed here from most influential to least (don’t worry if you don’t know what all of these are; we define them below):

  • Percent of on-time payments
  • Open credit card utilization
  • Derogatory marks, such as accounts in collections and bankruptcies
  • Average age of open credit accounts
  • Total number of accounts
  • Total hard credit inquiries

These are all taken from your credit report and are the factors most useful for predicting the chance that you’ll default on a loan. For most credit score models, you’ll receive a score between 300 and 850. Many creditors won’t tell you exactly what score you need to have to be considered a “good” or “excellent” borrower in their eyes, but there are some general guidelines.

  • 300 to low 500s – Poor
  • Mid-500s to mid-600s – Fair
  • High 600s to low 700s – Good
  • 720 and above – Excellent

If you’ve checked your credit score recently, these general ranges will give you a good idea of where you stand. If you haven’t, you can get your free TransUnion credit score daily at Credit Karma, which will also explain which factors of your credit you should focus on. To see your Experian credit score, check out Credit Sesame, which shows you your updated credit score monthly. (Both of these sites also give you more details, like your total debt.)

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