So you know your credit score, now what? Brag to you friends? Compare it with your co-workers?
Before you go announcing it to the world, get a better understanding of what that three-digit number actually means. Remember, to effectively evaluate your credit score you’ll need a range as well.
Just as you would if you were taking a test in school, without one, a score is meaningless. After all, “A’s” and “F’s” would just be arbitrary letters if we didn’t assign them values beforehand.
Like all other scoring models, credit scores have numerical boundaries. The so-called “credit score range” for the standard consumer FICO score is 300 to 850, though other credit scores, such as the less popular VantageScore, start as low as 501 and rise as high as 990.
If you’re wondering how FICO came up with theirs, as opposed to say 1-100, when the score was first developed the limits were not constrained, and 300 was the lowest score and 850 was the highest.
Additionally, some versions of the FICO score, such as those used for auto loans/leases, start from as low as 250 and climb as high as 900.
Here are the most common credit score scales in use today:
FICO score range: 300 – 850
FICO NextGen Score range: 150–950
VantageScore range: 501 – 990
Equifax credit score range: 280 – 850
Experian PLUS Score range: 330 – 830
Experian’s National Equivalency Score range: 360 – 840
TransRisk New Account Score range: 300 – 850
FYI: Credit Karma uses the TransRisk New Account Score and the original VantageScore, FreeCreditScore.com uses the Experian PLUS Score, and Credit Sesame uses Experian’s National Equivalency Score, all of which are not true FICO scores.
Additionally, the newly launched VantageScore 3.0 scoring model uses the same credit score range as FICO, 300 to 850. Look for the old scoring range to be phased out over time.
Check out the illustration I created of the standard consumer FICO score range above, which is based on a median FICO score of around 710. This should give you a quick idea as to where you fit in, assuming you already know your credit score(s).
We also have an image of the FICO score distribution below, which illustrates where most consumers stand credit score-wise. Notice that most consumers have credit scores within the 700-800+ realm. You’ll want to be on the higher side of this distribution to ensure you have good credit.
See Where You Stand with My Credit Score Range
Let’s start at the top (the best place to be) and work our way down. Note that we’re using the standard 300-850 FICO model for my credit score range, which is much more relied upon than any other algorithms at the moment.
800-850 Credit Score
A credit score of 800-850 is basically flawless credit. Though I’ve never seen an 850 credit score (readers have told me they have 900+ scores but those are different scoring models), scores of 800-850 are fairly common. An important thing to note here is that some consumers may have 800 credit scores the minute their credit profile is established, but without supporting credit history, the score will mean very little to banks and lenders.
On the other hand, a credit score of 800-850 accompanied with years of solid history indicates that the borrower will be granted the lowest rate on everything from credit cards to auto insurance and mortgages. Scores in this bracket represent about 13% of the population.
760-799 Credit Score
A credit score of 760-799 is considered good to great credit, and will typically result in interest rates and approval rates that a credit score in the 800-850+ bucket would yield. The only difference might be a few more pricing incentives at the 800-850+ range, and a more thorough credit check. But all in all, credit scores in this bucket are considered excellent and you really don’t need to worry if you scores fall in this category. In fact, roughly 27% of the population has a credit score of 750-799 alone.
*High Achievers: FICO now considers individuals with FICO scores above 785 to be in a bracket all their own. It’s unclear if this will create another meaningful scoring threshold for creditors, but I wouldn’t be surprised.
720-759 Credit Score
A credit score in this range isn’t all that different from the 760-799 category, though there are some thresholds for FICO scores of 760 and above. For example, when applying for a mortgage, a borrower with a 760 credit score may secure a slightly lower interest rate than a borrower with a 730 credit score. But it’s unlikely that the 760 credit score will be required for approval. It simply leads to a more favorable interest rate, which means the more creditworthy borrower saves money!
680-719 Credit Score
A score in this bracket is still considered good credit if at the higher end, and average credit if closer to the lower end. Although it’s not perfect, you should still be able to qualify for most loans and auto or rental leases, although interest rates may be a little higher than those offered to borrowers with excellent credit. There will be situations where a credit score in this range will prevent you from getting certain types of financing, such as an A-paper mortgage loan or the lowest auto insurance premium, but it’s certainly not bad credit.
660-679 Credit Score
Credit scores from 660-679 are considered “good enough” or “OK” by many creditors, though you may see further restrictions and fewer approvals when attempting to get a auto loan/lease, credit card, or a mortgage. Scores at this level are fairly common, and no cause for alarm, though they are below the average. But it would be wise to evaluate your credit score and work to improve it. In this range, it is quite probable that you aren’t securing the lowest interest rates, and subsequently losing money as a result.
620-659 Credit Score
If you find your credit score in this realm, you’re on the cusp of breaking bad. And you’re really playing with fire because a lot of creditors, especially mortgage lenders, see 620 as the dividing line between creditworthy borrowers and subprime borrowers. Additionally, some credit card issuers aren’t interested in extending credit to those with credit scores below 640.
At this level, you should probably be taking meaningful action to rectify the situation, as opposed to just casually monitoring your credit score. Although not the end of the world, your credit score is costing you money, and maybe even approvals on credit cards and other lines of credit.
580-619 Credit Score
This is where “OK” and “decent” turn to “bad.” Credit scores in this range are clearly below average, and you will have a difficult time securing a loan, or applying for a credit card. If you are able to secure financing, you’ll likely be stuck with an above-market interest rate, especially for lower credit scores in this bracket. If your credit score falls in this area, you definitely need to take a hard look at your credit report and take measures to raise your credit score immediately.
Many consumers with credit scores in this bracket are considered “subprime” and may have to work with bad credit banks and lenders to secure financing (see: secured credit cards). You’re basically throwing money away at this point.
500-579 Credit Score
Credit scores in this bucket are just flat out ugly. If you’ve got a credit score in this vicinity, there’s a good chance you have a major derogatory mark on your credit report such as a collection, charge-off, mortgage late, a foreclosure, or a bankruptcy. There is no question that your credit score is in need of serious credit repair.
At this level, you must evaluate your credit and act immediately to turn things around. You’re clearly paying higher interest rates and making credit mistakes that will impact your life for years to come.
Below 500 Credit Score
Credit scores below 500 are the worst of the worst. If your credit score is this low, your credit report will definitely contain numerous major derogatory marks, with very little positive data to speak of. If your credit score is below this level, you may want to consider speaking with a professional about your situation.
After all, there’s a good chance you’ve got serious financial problems if your credit score is this low. Start picking apart your credit report line-by-line and educate yourself about credit scoring immediately to begin to alleviate your problems. It’s going to take time to improve your credit score, but not all hope is lost.
So now you should have a good idea as to where you stand credit score-wise and what you need to do to improve things, repair things, see a professional, or simply maintain your healthy financial lifestyle.