In the end, don’t panic too much about whether your credit score falls into the “very good” or “good” bracket. Your credit score is just one piece of information that a lender will use when determining whether to offer you credit, and at what rate.
Plus, a lender will also take other factors into account beyond your credit score, such as your income and existing monthly debt payments. Lenders can internally use a variation on the above tiers, and while one bank may offer its best interest rates to people with a FICO credit score of 720 and above, another lender might only provide those top rates to folks with credit scores higher than 740. However, the most important factor is what your lender considers to be a good credit score. Some models can even have a scoring system that varies from the typical 300 to 850 range.Ĭheck your score now and keep an eye on your credit with this offer. On the other hand, a VantageScore credit score of 785 would be considered “excellent,” while the same score would be deemed just “very good” in the FICO system.Īnd even within these two broad credit scoring systems, there are dozens of different models that focus on various aspects of your credit, and you’ll get a different credit score from each model. A FICO credit score of 600 would be rated as “fair,” but a VantageScore of 600 falls into the “poor” category. With all that in mind, here’s how a typical FICO credit score breaks down:Īs you can see, there’s a lot of variation between the two competing systems. So when determining whether your credit score is good or bad, it’s important to know which credit scoring model your score comes from. While both systems use a range of 300 to 850, they differ on what constitutes a good credit score. Monitor your credit with this credit score offer. A second competing system known as VantageScore is also sometimes used by lenders and other companies analyzing your credit. The most well-known and widely used credit scoring system is called FICO, named after Fair, Isaac and Company, which invented it.
#Fico credit score how to#
There are many different ways to translate the information on your credit report into a simple three-digit number, so there are many different credit scoring models, which are the algorithms that decide how to calculate that one number. It includes almost everything on your report, such as the number of open accounts, the types of accounts, your payment history, how often you’ve tried to get new credit and so on.Ĭredit scores typically range from 300 to 850, but not always, and that brings up an important point - not all credit scores are the same. Basically, a credit score is your entire credit report boiled down into one easy-to-reference three-digit number. But what exactly does your credit score mean, and what’s a good credit score versus a bad one?īefore we get into good credit scores versus bad scores, it’s important to understand what a credit score actually is. When you’re applying for credit, whether it’s a mortgage, a personal loan or a credit card, your lender will almost always look at your credit score. Your CNN account Log in to your CNN account
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