What Is The Credit Score Scale?

Despite all the fanfare given to credit scores, the fact remains that not everybody understands the credit score rating scale. In the United Sates, there are currently three agencies that assign credit scores. However, two of them, NextGen score and Vantage score, actually control very little of the market. Therefore, these paragraphs will focus on the most commonly referred to ones, which is the FICO score.

FICO stands for the Fair Isaac Corporation, and although they provide a number of different services for various companies, they are particularly infamous for their credit scores. They assign consumers a score which lies somewhere on the credit score range of 300 to 850. As any credit score scale guide will assert, most scores lie on the higher end of the spectrum. The median score, according to FICO, is approximately 700.

Although the numbers stay the same, whether a number is considered good, poor, or even excellent may differ from source to source. However, typically, you can expect most sources to align on a credit score scale guide that is as follows. A poor score is 550 or below. A fair score is 550 to 669. A good score is 670 to 729. Sometimes, scores in that range are referred to as very good. An excellent score is anything above 730.

FICO determines consumer’s score based on information that they collect and compile from each of the three credit reporting agencies, Experian, Transunion, and Equifax. According to Wikiwedia, they base their scores using the following percentages as a guide:

• 35 percent is based on your promptness at paying bills. If the bureaus report that you have paid a bill late, it will reflect poorly on your score. However, most banks will only report a credit card, installment loan, or mortgage payment as late if it is more than 30 days late.
• 30 percent is based on your ratio of revolving debt. Revolving debt is debt that can be spent and paid back and re-spent like credit cards or lines of credit. Analyzing the ratio means that they look at the amount of debt you have compared to your available credit.
• 15 percent deals with the amount of time you have had credit history, and longer is always better.
• 10 percent deals with the variety of credit you have. That means, for instance, that having an installment loan like a car loan combined with a credit card and a bank line of credit is probably better than simply having five or six credit cards.
• 10 percent reflects your recent credit inquiries. Although checking your own credit will not hurt your score, your score will be impacted by applying for new lines of credit.

By using the information that FICO uses to compile your credit score, you should be able to increase where your score falls on the credit score rating scale. If you are interested in applying for a line of credit and want to know if you might qualify, ask the lender which credit score range they typically accept. They will often be able to help you further understand the credit score scale guide. However, keep in mind that your income and your debt to income ratio will also impact whether or not you qualify for any given loan.

If you are interested in finding out your current credit score, you have two options. You can purchase just your FICO score directly from myFico.com for a nominal fee. Alternately, you can purchase scores from each of the three credit bureaus plus the contents of your credit report from Equifax for a bit more money (still not very much, though). If you plan on taking out a mortgage, car loan, or other large loan in the near future, it’s probably worth purchasing all three scores in my opinion. “Get Equifax 3 Bureau Credit Report and Scores Now!“