The Credit Score Scale
Understanding the scale that is used to compare one credit score to other credit scores is essential. The credit score scale is a fundamental tool of all credit services and can come into play when you’re looking for a job, buying an expensive product, or looking for a loan. Luckily, the credit score sale is very easy to understand, even if you don’t have much experience with financial products.
A credit score (also known as a FICO score) can fall anywhere from 300-850. Most companies that look at credit reports will use a general scale based on averages, although they will also look at the individual features of a person’s credit report–not just the number at the top of the page.
760 and up is considered to be excellent and requires a long credit history with on-time payments and the right types of credit combined with low amounts of overall dept. 700-759 is considered very good, while 600-699 is considered good. 620-659 would be considered “not good,” 580-619 is “poor”, and 579 and below is “very poor.” The lowest credit scores on the scale go to people with major negative financial events like bankruptcy on their records.
Most people will find their credit scores to hover around 685-700. A lower score does not necessarily mean that you won’t be able to find a good credit card or loan, just that it will be more difficult to do so. People on the higher end of the credit score scale will pay less in interest as long as they’re able to keep their scores in that range.
Improving your placement on the credit score scale requires a different approach to how use your credit and how you choose types of credit to use. Depending on where you rank, you may need to lower the total amount of your debt or look for errors in your payment history that you can have removed from your record. You may also simply need to build a history of good credit usage, particularly if you haven’t been using your credit for very long.
There are three main credit reporting agencies that can tell you your credit score: Equifax, Experian, and Transunion. Your choice of credit reporting agency will not affect your score or your placement on the credit score scale. If you’re interested in improving your place on the credit score scale, the first step is to get a credit report and to look for elements that may be lowering your score. It can take some time to change your credit score and to move into a better area of ranking, but it’s well worth the time, as this will result in a wider range of available loans and finance rates.