Look, there’s not other way of saying it – Credit Scores are complicated. Understanding how Credit Scores work is even more complicated. But, since the purpose of this blog is to take the complex and make it easy to understand, we can’t put it off any longer. After all, anyone who wishes to join in our wonderful institutions of readily available credit vies for the highest possible credit score available. But, what is that magical score? Where does your number fit in on the scale? And how do they come up with that all-important three-digit number that follows us around like a piece of glitter?
What is a Good Credit Score?
Remember way back in the intro when we said Credit Scores are complicated? Well, here we go: A good credit score depends on which credit score you’re looking at. A common misconception is the three main credit bureaus (Equifax, Experian, and Transunion) are the only scores. This isn’t true. While the three main bureaus do have their own scoring models, other companies sell their versions to lenders as well. There’s actually a range of scores depending on where you get your scores.
The various scoring models are:
- FICO Score: 300-850
- VantageScore 3.0: 300–850
- VantageScore (versions 1.0 and 2.0): 501–990
- PLUS Score: 330-830
- TransRisk Score: 100-900
- Equifax Credit Score: 280–850
No matter which model you’re looking at, the higher your score the lower risk potential lenders see. But, what is considered a ‘good’ score? As you can see by the small chart, almost all credit scores have a range of 300 to 850. A general rule of thumb is:
- Excellent Credit: 750+
- Good Credit: 700-749
- Fair Credit: 650-699
- Poor Credit: 600-649
- Bad Credit: below 600
Unfortunately, this is only a loose guide. Lenders and other financial institutions have their own guidelines on what constitutes a good credit score. For many mortgage lenders the threshold they look for is anything over 680. The higher the cost of the home, your lender may require a 750 or even higher. No matter what, your credit score will determine your interest rate on your mortgage.
Like we said, no matter how much we try to simplify the criteria of credit scores we’re sure you’re going to have questions. This is why we have the best credit experts available to take your call and help you have a better understanding. Give us a call today at 866-488-2066.