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FICO® and VantageScore® are the two most prominent models for evaluating creditworthiness. The latest FICO model, FICO 10, considers scores between 800 and 850 “excellent,” while scores between 781 and 850 hit that mark for the newest VantageScore model, VantageScore 4.0.
There are multiple credit score ranges that help lenders determine how likely you are to repay your debts. While many lenders will make decisions based on your FICO credit score, an increasing number of financial institutions use VantageScore as well. If you’re wondering what is considered a good credit score, know that a rating of 670 or higher is generally good, no matter which model a lender uses.
But having a good, very good or excellent credit score can help you obtain new credit more easily and with better interest rates. Here, we’ll answer several common questions about credit scores and discuss how you can work on and rebuild your credit faster.
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There are multiple differences between a FICO Score and a VantageScore, especially when it comes to determining credit score ranges. Under the FICO model, excellent scores fall between 800 and 850. Under VantageScore 4.0, you have excellent credit if your score falls between 781 and 850.
If you’re not in the excellent range, that’s ok. A good FICO score would fall between 670 and 739, while a good VantageScore would fall between 721 and 780. And good credit scores can still help you qualify for good loans and credit cards.
Here are the officially published scoring ranges from FICO and VantageScore.
| Credit Score Ranges | |
| FICO 10 | VantageScore 4.0 |
| Poor (300 – 579) | Very Poor (300 – 499) |
| Fair (580 – 669) | Poor (500 – 600) |
| Good (670 – 739) | Fair (601 – 660) |
| Very Good (740 – 799) | Good (661 – 780) |
| Excellent (800 – 850) | Excellent (781 – 850) |
If you want to achieve an excellent credit score, you’ll want to learn what affects your credit score. The following five factors determine your credit using the FICO scoring model.
Credit scoring models give each component of your score a percentage weight—the larger the percentage, the more important it is in determining your credit score. We’ve listed each of these scoring factors in order from largest to smallest impact on your credit.
Each component of your score is given a percentage weight—the larger the percentage, the more important it is in determining your credit score. We’ve listed each of these scoring factors in order from largest to smallest impact on your credit.
All of these factors help give potential lenders a lot of insight into your financial habits, which is what your credit score ultimately represents.
A longer and more favorable credit history means that you’re more likely to repay your debts. This often means a financial institution will be more likely to extend you credit or new loans.
Meanwhile, a poorer credit history means that you’re a higher risk for lenders. This can lead lenders to deny new credit applications or to offer you higher interest rates to offset that risk.
Now that you know what makes up a good credit score, it’s time to think about why it may be important for you to have a high score.
The benefits of a good credit score can’t be understated. Both loans and credit cards typically have minimum credit score requirements, and interest rates are more favorable for those with higher scores.
Having good credit can make it easier to get a favorable rate on an auto loan—people with excellent credit can have rates up to five times lower than people with fair credit. A good credit score could also save you thousands of dollars in interest on a mortgage by providing you with a lower interest rate.
Credit scores can also influence other areas of your life, like renting an apartment or getting a job. And the ability to access credit cards with strong perks and rewards can create value out of the money you would have spent, regardless.
Overall, better credit can have a positive influence across many areas of your life. Some important loans, like car loans and mortgages, are generally inaccessible to people with poor credit, so taking the time to build your credit or improve your score can be valuable in the long run.
Negative information can stay on your credit report for up to 10 years, so it’s essential that you work to handle your accounts responsibly. The better you understand what impacts your credit score, the easier it will be to improve your financial habits. Here are the most common factors that can negatively impact your score and, in some cases, cause an excellent credit score to drop:
After you apply for new credit, your credit report will include a hard inquiry, which simply notes that a lender has accessed your credit file. These inquiries can temporarily drop your score, so you’ll want to avoid applying for too much new credit at once. However, hard inquiries typically leave your report after about two years.
A payment that is more than 30 days late could negatively affect your credit, and the negative item associated with a late payment could stay on your report for up to seven years.
An account that remains unpaid for a long period could be charged off as bad debt, meaning the lender writes it off as a loss. It may eventually get sent to a collection agency. Having an account in collections will almost certainly affect your score, and the account will remain on your report for up to seven years.
Closing an old credit account can affect the total length of your credit history and/or your credit utilization ratio. Unless you have an important reason to close an account, it’s often better to simply leave unused accounts open.
If you voluntarily surrender the collateral that secures a loan, like a car or a house, you’ll see a negative item on your credit report, as well as a potential score drop.
Filing for either Chapter 7 or Chapter 13 bankruptcy will likely lead to a drop in your score. Chapter 7 bankruptcy can remain on your report for 10 years. Chapter 13 bankruptcy can stay on your credit report for seven years.
An excellent credit score is within reach, especially now that you know the factors that make up a better score. If you continue to keep a healthy mix of accounts with low balances and on-time payments, you’re already well on your way to good and even excellent credit.
Improving your credit is a relatively simple process. You’ll want to start with a review of your credit report and a plan to improve in all of the areas that affect your credit. Keep track of your progress over time and make adjustments as needed.
As you make a plan to improve your credit score, keep the following tips in mind:
Most importantly, be willing to make adjustments as you monitor how your score changes over time. Avoid opening up too many new accounts at once, and only add lines of credit that you’re able to pay consistently.
As you work to improve your credit, always consider your own credit behaviors from the perspective of your lenders. If you tend to repay your debts and use credit responsibly, those tendencies will likely lead to healthier credit.
Checking your credit score is a great way to understand where you currently stand, and it helps you keep track of your score goals as you build credit.
While it doesn’t appear on your report, you can generally check your credit score through your credit card company, your bank or a free online service. If you want to see the information that your credit score is based on, as we mentioned earlier, you are legally entitled to at least one free credit report per year from each of the three credit bureaus.
Here are some more details about checking your credit score:
In addition to the above options, you can typically see your credit score when applying for new credit. When you authorize a lender to review your credit file, you are also allowed to see the information the lender used to make their decision.
Remember that each lender is free to use different information and scoring methods to make their decisions. Some may use the FICO scoring method while others may use the VantageScore model. This means you’ll have more than one credit score to review. However, any of the approaches listed above should give you an estimate of your score.
Boosting your score from fair to excellent takes time and commitment to keeping your finances in order. But it’s possible as long as you monitor your credit often. Remember, some of the information that shows up on your credit report may be inaccurate.
By reporting and disputing those errors, you’ll help remove potentially negative information, like unapproved credit inquiries, and help your score improve.
But before you can start looking for ways to boost your score, you’ll need to know where you stand. Get your free credit snapshot from Lexington Law Firm and see where your score is today.
For most mortgage lenders, a credit score of 620 is the minimum score required to be eligible for a conventional loan. Buying a home with a lower credit score is possible, but that will depend mainly on your debt-to-income ratio. If your score is lower than you’d like, you may want to build your score before buying a home. This could help you qualify for a better rate on your mortgage.
It’s possible to secure an auto loan with a wide range of credit scores. However, you’re much more likely to be eligible for better rates with a score of 700 or higher. A 770 credit score would be considered “very good” and likely qualify you for a low annual percentage rate (APR).
No. Under the FICO scoring model, an excellent credit score range falls between 800 and 850. Under the VantageScore model, excellent credit scores fall between 781 and 850. The higher your score is, the better it is. But you don’t need to have a score of 850 to have excellent credit.