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What is a Credit Score and What are the Credit Score ranges?
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What is a credit Score, and What Are the Credit Score Ranges?
Credit scores assess your probability of repaying new debt. Scores above 690 are generally considered good credit.
Written by Amanda Barroso Lead Writer | Budgeting, credit scoring, personal finances Amanda Barroso is a personal financial journalist she has joined NerdWallet in 2021, covering credit scoring. She also wrote research studies on data and also was a contributor to the NerdWallet's "Smart Money" podcast. Prior to joining the team Amanda was a journalist for over a decade covering issues facing many Americans, which includes her role as a journalist in the Pew Research Center as well as a policy analyst at the National Women's Law Center and a professor at the college level. Amanda received a doctorate degree from The Ohio State University.
and Bev O'Shea personal finance writer | MSN Money, Credit.com, Atlanta Journal-Constitution, Orlando Sentinel Bev O'Shea is a former NerdWallet authority on consumer credit, scams and identity theft. She has a bachelor's degree in journalism from Auburn University and a master's in education from Georgia State University. Before coming to NerdWallet, she worked for daily newspapers, MSN Money and Credit.com. Her work has appeared on The New York Times, The Washington Post, the Los Angeles Times, MarketWatch, USA Today, MSN Money and many other places. Twitter: @BeverlyOShea.
Updated on Mar 28, 2023
Editor: Kathy Hinson Lead Assigning Editor Personal finances, credit scoring debt and money management Kathy Hinson leads the Core Personal Finance team at NerdWallet. In the past, she worked for 18 years working at The Oregonian in Portland in roles including copy desk chief and team director of design and editing. Her previous experience includes copy editing and news for various Southern California newspapers, including the Los Angeles Times. She received a bachelor's degree in mass communication and journalism from The University of Iowa.
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Credit scores influence all aspects of your life: whether you get a loan or credit line, what interest rate you pay or whether you are able to obtain the apartment you've always wanted.
A higher credit score can give you access to more credit products -- as well as at lower rates of interest. People with credit scores that are higher than 775 or less typically have several options, including the ability to qualify for no-interest financing for cars and for credit cards with 0% introductory interest rates.
It's important to know the workings of credit scores and what the credit score ranges are.
What is an credit score?
Credit scores are a 3-digit number, generally on an scale from 300-850. It estimates how likely you are to repay borrowed money and pay your bills.
Scores for credit are calculated using the information you provide about your credit accounts. This information is gathered by credit reporting agencies, often known as, and then compiled to create your credit report. The three biggest companies include Equifax, Experian and TransUnion.
You don't have a single credit score -- you have several, and they're likely to vary. This is because two large businesses calculate their scores. More on that in the following.
The highest credit score you can achieve is 850, but there isn't much difference between a "perfect" score as well as a high score when it comes to the products and rates you are eligible for. That's why you shouldn't worry about trying to get an 850 score, especially because scores can fluctuate often.
Find out how your credit is scored
Check your score for free and the factors that impact it, and get insights into ways to continue building.
The difference is what's the main distinction of FICO score and VantageScore?
Two companies dominate credit scoring. It is the most well known score. Its primary competitor is . Generally, they both utilize the credit score range of 300 to 850.
Each company has several different versions of its scoring formula, too. The scoring models used typically are VantageScore 3.0 as well as FICO 8.
FICO and VantageScore draw from the same data, weighting the information slightly differently. They usually work in tandem If you have an excellent VantageScore, then your FICO is likely to be very high too.
What is the reason My FICO score and VantageScore different?
A score is a snapshot and it can change depending on the time you review it. Your score may differ based the credit bureau that provided the credit report data used to create it or the bureau supplied the data. Each creditor may not report information about their accounts to all three bureaus, which means you will receive a credit report for each one is distinct.
What are the credit score ranges?
Creditors establish their own standards for the scores they'll accept however, these are generally accepted guidelines:
Any score that is greater is generally considered
A score of 690 to 719 is considered .
Scores between 630 and 689 are .
Scores of 629 or less are
Alongside your credit score, other aspects like your income and other debts could be a factor in creditor' decisions about whether to approve your application.
Did you have any idea...
The score in America United States varies a bit between the two main scoring models. The average FICO 8 score was 716 as of August 2022, similar to the score a year earlier. (0) FICO Choices Blog . . Accessed Aug 30, 2022.
Its VantageScore 3.0 Average was 695 at the second quarter of 2021.
What influences how your scores on credit?
The two main scores for credit, FICO and VantageScore, consider many of the same factors but weight them somewhat differently.
For both scoring models, the two things that are most important are:
It is important to pay bills in time. A misstep here can cost you dearly. Any time you're at least 30 days after the due date is recorded on your credit history for years.
How much you have to pay. Credit utilization describes how much of your credit limits are making use of. It is recommended to limit your use to less than 30% of your credit limits -- lower is better. You can take several steps to
A lesser amount of weight is given to these variables however, they're still worth keeping an eye on:
The more time you've had credit and the greater an average account's age the better for your score.
Credit mix Scores are rewarded for the ability to have more than one type of credit -- an ordinary loan and a , as an example.
How recently you have applied for credit: If you make an application for credit, you could see a temporary drop in your credit score.
The factors that affect your credit scores
There are a few things that aren't included in the calculation of credit scores These are mostly to do with demographic characteristics.
For example, your race or ethnicity, sexual status, or age don't count as part of the equation. Also, your work history -- which can comprise things like your pay, title or employer -or the location you reside in.
How can you improve your credit score?
What does your credit score measure? In one word creditworthiness. But what exactly does this mean? The credit score you receive is an attempt to determine your financial habits. The factors that are incorporated into your score can also provide reliable ways you can build up your score:
Make sure to pay all bills in time.
Maintain credit card balances below 30percent of the limits and, in the ideal case, much less.
Make sure you have old credit cards in your account to ensure the age average of your accounts. Also, consider using a mixture of credit cards as well as installment loans.
Spread out credit application forms instead of applying for many in a short time. Typically, lenders will perform an "hard pull" on your credit when you apply, which temporarily dings your score. Insufficiently many applications to each other could cause further harm.
There are several options to consider when beginning your journey and methods to when you've got it established. Making payments towards your account balances several times throughout the month or asking for greater credit limits can elevate your score.
How can I check and monitor my credit?
You can check your own credit -- it -you can determine what the lender will likely to find.
It is possible to obtain one through a personal finance website like NerdWallet and offers a TransUnion VantageScore 3.0. A lot of personal banking apps provide credit scores for free which means you can create a an habit of checking them in whenever you log into your account to pay your bills.
It is important to use the same score every time you test. Doing otherwise is like trying to keep track of your weight on different scales , or possibly switching between pounds and kilograms. Choose one score and then create an exercise plan to track your credit. The changes that are analyzed by one score will likely be seen in other scores.
Remember that, like weight, scores fluctuate. So long as you maintain a healthy range, those variations won't have an impact on your financial well-being.
You can protect your credit score by communicating with every credit bureau. You can still use credit cards, however you cannot use your credit card information to apply for credit based on your personal data since access is denied by freezing your credit. Freezing your credit is easy and takes only a few minutes, but it goes a long way in securing your finances.
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Authors' Bio: Amanda Barroso covers consumer credit and debt for NerdWallet. She previously worked for the Pew Research Center and earned her doctorate at The Ohio State University.
Bev O'Shea was a credit writer at NerdWallet. Her work has been published on the New York Times, Washington Post, MarketWatch and elsewhere.
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